The Unequal world of Interns




Well, you know, things aren’t always what they seem to be. What can I say, cosmetics does wonder.


The ZERO dollar Trainee


I do believe that law graduates get paid higher than most other graduates from other faculties (well at least during my time – when I graduated in the early 2000s). Yes, I know the hours are hard and the work is punishing, but hey, at least they are paid well… right? There are after all jobs that are punishing and you get paid peanuts.

In fact, looking at this recent article (see below), law graduates from SMU and NUS still earn some of the highest if not the highest salary among all the graduates – Average Gross Monthly Salary being $4,915 and $4,898 respectively.

  • Graduate Employment Survey 2016 (Published 2017) (read here)

However, has the glut of law graduates in Singapore gotten so serious that trainees are only able to get a placement if they do not receive an honorarium during their stint?

By all means, work for something you are passionate about. However, this is really a stretch – to be paid nothing…. (worse so if you fund your overseas studies via a student loan and has no financial supports from your parents or elsewhere).

Given the fact that both foreign and local law graduates are required to complete a six-month practice training contract at a Singapore law practice before being called to the Bar – law firms here will always have a ready supply of trainees given the glut of law graduates. For some other courses, internships are optional.

  • More local law firms willing to take in trainees, but without pay (read here)
  • The Big Read: As supply of lawyers lurches from shortage to glut, spotlight falls on policies (read here)
  • Law grads hit the barriers (read here)

In fact, according to this article in Aug 2014, it highlighted that “although the number of recognized overseas universities has remained at 35 since 2006, the total number of Singaporeans reading law in the United Kingdom has more than doubled to 1,142 between 2010 and last year, based on the Ministry of Law’s estimates”.

On hindsight, I reckon this increase in lawyers started in 2001, when the Second Committee formed by the government on the Supply of Lawyers, found that demand had outstripped the supply of lawyers. The NUS law school subsequently increased its annual enrollment from 150 to 200 over the next few years while law graduates from 10 more overseas universities, including Australia and New Zealand, were allowed to practise here should they meet the academic cutoffs.




The 5-figure per month Intern


On the other hand, if you are an intern working in Facebook in the US, you can expect USD 8,000 (or SGD 11,000) a month.

Or if you are an intern working in investment banking or sales and trading roles, in one of the global banks in Singapore, like Goldman Sachs or J.P. Morgan, you can expect to be paid around SGD 10,000 per month.

  • Facebook pays interns $11,000 a month: Report (read here)
  • Facebook pays interns US$8k a month, topping list of 25 best-paying firms for internships in US (read here)
  • The highest paying investment banking internships in Singapore (read here)

I do believe that the business model of the biggest tech firms (which by the way are some of the biggest companies in the USA by market capitalization) is ultra efficient (basically need negative cash to generate cash flow)…. but do the interns working in these firms (Facebook, Microsoft, Apple, etc) generate such high profit for the companies to warrant such high salary?

Or for that matter even some of the global banks based in Singapore.

Frankly, if you ask me personally, I do feel that tech firms and banks (when it comes to the stock market) are over-valued for a long time. Yes not as over-valued as the values prior to the bust or global financial crisis, but nevertheless over-valued. Whether we are in a bubble or not, I leave it to you to decide.

The recent sell-off in tech stocks has many analysts lamenting that tech stocks have been over-priced for a long time, and the short-term correction is only normal.

  • The five biggest tech stocks lost nearly $100 billion in value on Friday (read here)


How we perceive the value of money

Well, come to think of it, for some of these interns, these internships are the first experience they had with earning actual money…. Some have never worked in the ‘real’ world all their life.

“Wow!! First time working and getting 5 figures a month already” vs “So hard to earn my lunch money”

Will this, in turn, create a false sense of confidence for those interns with such high pay?


And what about those law trainees (who are often graduates who read law overseas) working for literally ‘nothing’? What to show for all their effort and money spent for an overseas law degree?

Will they be unduly demoralized even before they start their career?


I reckon different people have a different perception of money. In addition, the stage of life you are at currently and what you earn do have an effect on how we perceive money.

I reckon I am still stuck in the teenage stage when it comes to my own perception of money. Well, my wife is at a more advanced stage :p

Not sure about the intern getting S$11,000 per month – what stage will he be at?

  • Have You Ever Noticed How Your Perception Of Money Has Changed? (read here)
  • Age vs Money: How Time Changes Our Perception of Cash (read here)


Posted in Uncategorized | Leave a comment

QAF (Intrinsic Value and Trailing PEG)

I have previously written about QAF Limited on 7 July 2016 (read here). If I am not wrong, the stock price then was around SGD 1.08. On 22 June 2017, the stock price of QAF is SGD 1.325.


Well, I did mention in my July post that I will keep an eye on this stock.

I did a quick study on the financial statistics.


In comparison to the statistics in July 2016, there appears to be an improvement, namely:

  1. The trailing P/E is now lower at 6.31 while Price/ Book is about the same. At first glance, the stock P/E appears really low (surprisingly given the run up in share price). If we divide the stock price on 22 June 2017 by the FY 2016 EPS, we will get a P/E of 1.325/0.21=6.3. But this EPS of SGD 0.21 was due to the sale of 20 per cent of QAF’s shareholdings in Gardenia Bakeries in April 2016. If we exclude this, FY 2016 EPS would be SGD 0.109 and we will get a P/E of 1.325/0.109= 12.2. Not low but not very high either.
  2. The Return on Equity has improved greatly – reaching 22.47% (some might even consider this a growth stock). However, if we exclude the one-off gains, ROE would be around 13% (read here). That would just be a slight improvement from the 12.69% on 7 July 2016. Return on Asset is a low 6.02%. Not a very cost effective business model – not surprisingly as QAF’s business model is pretty asset heavy.
  3. The Profit Margin and Operating Margin have improved, but still not great.
  4. Total cash and Total debt have increased. However, the resultant cash (after deducting debt is now SGD 38.4 mil. Which is so much more than the SGD 1.87 in July 2016. It is a vast improvement … Hmmm.. are they anticipating a ‘great flood’ or something?
  5. Consequently, the current ratio has also improved to 2.43 (from 1.98). Note:  Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses.
  6. The dividend yield, unfortunately, has fallen to 3.79% from 4.5% – probably due to the run-up in share price. Nevertheless, at 3.79% yield, it is not bad.

The stock is not exactly cheap.

The fundamentals seem to have improved – especially the balance sheet. Unfortunately so did its share price. Consequently, its dividend yield dropped.

  • Are QAF Limited’s Current Valuations High Or Low In Relation To History? (read here)

I reckon the improvement in balance sheet could be due to the exceptional gains from the sale of its 20 percent stake in Gardenia Bakeries as well as fair value gains recognized from its remaining 50 percent, in 2016.

  • QAF’s FY2016 profit more than doubles to S$120.4m (read here)

The company also seems to be in an expansion mode (see extract from FY 2016 Annual Report):

  • The Group is establishing new bakery plants in its core countries to expand its capacity and further capitalise on its economies of scale.
  • In the Philippines, the Group has announced a PHP1,070 million (approximately $31 million) expansion plan to build a new Mindanao plant and purchase land at Luzon province for another plant.
  • In Malaysia, a new RM175 million (approximately $56 million) plant in Johor will come into production this year while another RM178 million (approximately $57 million) plant in Bukit Kemuning, Selangor, will be completed by 2018. 
  • These new plants when completed, will increase the Group’s total bakery plants to 16.

Nevertheless, I am curious about the Intrinsic Value and Trailing PEG of this stock.

Trailing PEG and Intrinsic value

Let’s do a quick study on the trailing PEG and intrinsic value of QAF Ltd.

1) Trailing PEG

P/E: 6.16 (Data from POEMS)
Dividend Yield (%): 3.79
EPS compound growth rate (5 yrs): 13.03%
The trailing PEG will be 6.16/(3.79+13.03) = 0.36. Which is good (less than 1).

2) Intrinsic Value

First, let’s look at the estimated 5 years earning growth. We are going to use a time-frame of 5 years from now for this purpose. Given EPS and a PE ratio, the 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 (SGD 0.109) – I am using SGD 0.109 instead of SGD 0.21 as the EPS for 2016, as the SGD 0.21 was inflated due the sale of 20 per cent of QAF’s shareholdings in Gardenia Bakeries in April 2016 (read here).
  • R = compound growth rate (9.26%: Using the 5 yrs CAGR with EPS in 2012 as SGD 0.07, EPS in 2016 as $0.109. However let’s take a 20% discount, and use 7.408% as I am not really sure if growth can be maintained.)
  • N = number of years in the future (5)
    Estimated future EPS: 0.16

I will be estimating the future PE of QAF Ltd to be 12.32 (See below data from Morningstar) – average of the PEs from 2007 to 2016.


Future Stock Price

P = future stock price
EPS = future EPS
PE = future PE
Hence future stock price of QAF Ltd is 0.16 x 12.32 = 1.9712

Intrinsic Value

P = present (intrinsic) value
F = future stock price (1.9712)
R = MARR (15% or 0.15)
N = Number of years (5)
Hence, the intrinsic value of QAF Ltd is SGD 0.98.

Using another method, the intrinsic value I arrived at is SGD 4.88. That is considering factors like Risk-Free Rate, Beta, Operating Cash Flow, Total number of Shares outstanding, etc. See below.


Given that the share price of QAF on 22 June 2017 is SGD 1.325, there appears to be a margin of safety, if we refer to the intrinsic value of SGD 4.88 using the second method.

However, if we refer to the intrinsic value of SGD 0.98 using the first method, there is no margin of safety.

In Summary

In gist, I still believe that the financial fundamentals of QAF have been getting better in recent years. This is primarily on its balance sheet due to the one-off gains. Its business model is simple. ROE is marginally better, but ROA is still a drag though given its asset heavy business model.

The dividend yield, unfortunately, has dropped.

Stock price wise, not a clear cut as to whether it is undervalued. Nevertheless, the stock price has increased in recent years, so I do feel it might not be undervalued. Hopefully, price will lower to present a better opportunity.

It is one of the stock I am keeping an eye on – and will still be tracking it.

Posted in QAF Limited | Leave a comment

Portfolio Update

This will be just a quick update on my portfolio. Basically, it has been rather uneventful.


I am still in a net cash holding position in relation to my stock holdings. For this month, I did not divest any of my stock holdings. Personally, I am pretty comfortable with my holdings.

  • Robert Shiller: With stock valuations high, it’s time to reduce your holdings (read here)


The above table appeared in the 14 June 2017 Business Times. No matter what way I see it, the markets seem over-valued.

I have been doing some internal adjustment to my holdings:

  1. I topped up my SRS account.
  2. Transferred money from my CPF OA account to the CPF Special account.
  3. Bought Insurance: An Enhanced Incomeshield policy (Hospitalisation) and a Whole Life policy for my daughter. (A present from mom & dad, to her on Father’s Day)

I reckon the Whole Life policy is a ‘good to have’ insurance (kids don’t have term policies from what I have gathered). Whole Life policy is really not a necessity.

Stock Portfolio

Somehow, the high valuations in the stock market seem to like this invisible ‘force field’ that make me reluctant to invest. Yes, I am sure there are bargains out there – but I always felt that the biggest bargains can be found when markets correct or crash.

In retrospect, some of the stocks which I previously studied have gone on to reach higher highs – Cheniere Energy, Chipotle Mexican Grill, Mastercard, Paypal, Straco Corporation Ltd, Heineken Malaysia Berhad, Sheng Siong…..and much more.

And I am sure a lot of investors (who did not invest) would be bemoaning about the missed chance in investing in AEM and Best World. These would give any portfolio an outsize gain, given their outstanding share performance in recent times.



No point looking backward, opportunities would come again.

My stock portfolio is basically status quo.


So now it is down to 7 stock holdings. Back in March 2016, I had 14 stock holdings (read here). Quite a number of these stocks have been delisted.

The above percentage gain/loss did not take into consideration the dividends received.

Overall Proportion

However, as stated in my earlier posts: I have been on a mission to try to increase my war-chest. Namely the cash proportion in my portfolio. Note: I do not consider the value of my HDB flat in my net worth calculation. And my wife and I hold separate accounts (so basically it is only my personal net worth).

One thing about having a blog or a diary is that it kind of instil within me a sort of discipline. Yes, I don’t recall all that I have written. However, for those thoughts which I remembered, I do try to follow. It has been pretty consistent.

Yes, there are times when my fingers are itching to pull the trigger to purchase stocks – especially those growth momentum type of stocks – always in the news, and seems to be reaching new high every other day. It is sooooo… easy to just buy stocks. However, I will always remember the posts I did about the high valuations of the stock markets, short term irrational volatility of stock prices and the need to increase my war-chest.

Also, there are many great companies out there whose stocks have been overvalued for a long time. Frankly, my war-chest is just not big enough if there was a ‘sale’.


Back in Nov 2015, the cash proportion in my portfolio is a pathetic 7%. Perhaps the 2 charts below can illustrate how much the cash proportion has increased from then till now.


Cash proportion has increased from a mere 7% to 33%. This could be attributed to the divestment of some of the fundamentally weaker stocks, delisting of some stocks and divestment from the P2P loans and Invoice financing.

To me, the cash and stock proportions are the 2 main variables in my net worth pie chart. The rest (namely CPF, Insurance cash value and P2P loans, Invoice financing, unit trusts) either don’t fluctuate much or don’t have much weightage.

I don’t invest the money in my CPF account. I reckon the interest received from CPF holdings are safe and good enough for me. However, I do occasionally use the cash in the SRS account to invest in stocks.

Actually looking at the above chart is a bit misleading, as the overall value of my net worth has increased (since 2015) – in absolute terms.


My current war-chest amount is reaching close to 3 times my initial target for it (in absolute terms), or approximately 6.5 times the value of the war-chest in Nov 2015.

Not only did the proportion of my Cash/SRS increased, the overall net worth also increased. And oh yeah, in general, the stock portfolio performed well from Nov 2015 through 2016 to now, and of course, there is incremental cash infusion from my full-time job salary. So the reduction in stock value proportionally is lesser than the increase in war-chest.


By the way, I do not intend to divest/liquidate all my stock holdings. I intend to hold on to most of these stocks even in the event of a market crash (probably add on if prices drop to my target prices). Yup, I am always invested.

My passive income has decreased in comparison to the amount received in 2016, due to the reduction in my holdings in stocks and P2P loans / Invoice financing.

Nevertheless, the Passive Income amount has increased in relation to the amount received in 2015.

That’s it for now. 🙂

Posted in Portfolio | 2 Comments

Which is more profitable? High Dividend Yield Singapore Stocks or Dividend Growth Singapore Stocks?

I was reading some of my old posts and came upon a post, written in May 2016 about the difference between high dividend yield vs dividend growth stocks.


That post came about because I was then reading a book about Income Investing (Income Investing with Bonds, Stocks and Money Markets by Jason Brady- click here). In the book, Jason highlighted that given the choice, he would choose the latter: consistent dividend growth.

It is easy finding US stocks with a long history of increasing dividends – they are known as Dividend Kings.

  • 2017 Dividend Kings List: Dividend Stocks with 50+ Years of Rising Dividends (read here)

Not that easy in our local stock market context. In fact, to me, normally when I think of dividend stocks, my first thought is about high dividend yield stocks eg. REITs and Business Trusts.

Nevertheless, in my previous post in May 2016, I mentioned about 2 groups of Singapore Stocks. The first group (Group A) consists of local stocks which I consider as high dividend yield stocks, and the second group (Group B) consists of local stocks with consistent dividend growth.

I have two questions that I am curious to find the answers:

  1. Looking at these 2 groups of stocks, which of these stocks are more profitable over an extended period of time (eg. 5 years). This takes into consideration the total dividend payout (assuming we did not reinvest the payout) and the capital gain or loss due to stock price movement.
  2. Which stock has the highest dividend yield in relation to the original purchase stock price (from 5 years ago)?

What matters now may not matter in the future: However, before I continue, I do acknowledge that for the past years, after the 2008-2009 Great Financial Crisis, the interest rates have been held artificially low. Moving forward, we should be slowly going into a higher interest rate environment. Or to put simply, the dynamics would change.


I am not really sure how this might impact the first group of stocks which are typically REITs and Business Trusts in the next few years. They tend to more leveraged. Generally, I reckon this group of stocks will be affected more by any big spike in interest rates.

  • Do Dividend Track Records Matter? (read here)

Why 5 years? The reason why I chose a 5 years period is that some of the REITs and Business Trusts which I will be highlighting later are not listed more than 5 years ago (or I can’t find their historical financial data beyond the 5 years period).

The approximate 5 year period which I have selected is from 8 June 2012 to 12 June 2017.

Nevertheless, I would much prefer a longer period of say 10 years. This, I feel should give a more conclusive verdict.

So which stocks am I talking about? This is not an easy question to answer, especially for the stocks in Group A (High dividend yield stocks).

Initially, I thought of using high dividend stocks which I am currently looking at (those that I am eyeing at, and would buy if price drop to a level I feel comfortable with). However, I felt that this method doesn’t really address the question – they are not really the highest yield.

Then how about listing those stocks with the highest yield? Again, I felt that these are not suitable (esp. when I first studied these stocks). Looking at the list of REITs from (see here), I noticed that some of their high yields are not consistent eg. could be due to one-off non-recurring profits (like sale of properties, or revaluation of assets) resulting in one-off high earnings and consequently dividend payout, or it could be due to the fundamental issues with the company business itself which caused the stock price to drop precipitously resulting in a sudden jump in the dividend yield for that year (as dividend payout remain largely unchanged).

I am looking for consistency and quality yield.

Ultimately, I guess it is only fair to pit the best against the best. I have to find the best dividend yield stocks which have generated consistent good yield over a period of time, to compare with the dividend growth stocks.


In the end, these are the stocks in my list and the respective references which I took them from (See below).

Group A  (High Dividend Yield stocks):

  1. Ascendas India Trust (SGX: CY6U) – Yield in 2016 is 4.88%;
  2. RHT Health Trust (SGX: RF1U) – Yields in 2016 and 2015 are 35.21% & 8.32% respectively;
  3. Mapletree Greater China Commercial Trust (SGX: RW0U) – Yield in 2016 is 6.74%;
  4. Mapletree Industrial Trust (SGX: ME8U) – Yield in 2016 is 6.15%;
  5. Croesus Retail Trust (SGX: S6NU) – Yield in 2016 is 6.92%.

Source: The Best Performing REITs in Singapore (read here)

According to the article above (dated 17 May 2017), the above-mentioned five constituents of the SGX S-REIT Index, have the best three-year total return (data as of 9 May 2017 unless otherwise stated).

Yes, I know, these are not very high yield stocks, but in general, as a group, these stocks have high yields and higher yields than the stocks in Group B.


Group B  (Dividend Growth stocks):

  1. Vicom (SGX: V01) – Yield in 2016 is 4.90%;
  2. Raffles Medical Group Ltd (SGX: R01) – Yield in 2016 is 4.90%;
  3. Straco Corporation Ltd (SGX: S85) – Yield in 2016 is 2.84.


  1. These are the four shares with consistent dividend growth (read here)
  2. Rock-Solid Dividend Shares to Start 2015 With (read here)
Note: The first article is slightly dated – the original source of this article is a February 26, 2014 Motley Fools article. Of the 4 stocks mentioned in the article (CapitaMalls Asia, Super Group, Vicom & Raffles Medical Group), CapitaMalls Asia was privatized by CapitaLand in 2014, while Super Group was acquired by  Jacobs Douwe Egberts (JDE) in 2017.

According to the articles, these companies:

    • Have a track record in growing their dividend;
    • Are able to grow their free cash flow and generate free cash flow in excess of dividends paid;
    • Have strong balance sheets.

By the way, these stocks do not have very low yield. In fact, Vicom and Raffles Medical can be considered as relatively good yield stocks.


The Benchmark

I will be also listing the data of the STI ETF (SGX: ES3) just for reference – as a sort of benchmark for these stocks.


Question 1: Which of these stocks are more profitable over an extended period of time (eg. 5 years).

The profit takes into consideration the share price appreciation (or depreciation) and the total dividend received. I am assuming that the dividend received each year was not reinvested into the same stock.

For simplicity sake, I did not consider the dividend received in 2017. For a number of the REITs, as they were only listed in late 2012 or 2013, there was no dividend issued in 2013. Hence, I am making some assumptions – assuming the dividends in 2012 is the same as those received in 2013.

In very simple terms, I am assuming that the shareholder bought the stock on 8 June 2012 and held it until 12 June 2017. What is the final profit (in percentage terms) in relation to his/her original purchase price 5 years ago?

FYI, I checked out this site for the dividend figures.

Rights Issues (read here): Rights Issues have ‘impact’. I did a check on the stocks in Group A to see if there was any Rights Issue from 2012 to 2017. It appears that was none. I stand to be corrected.

The occurrence of Rights Issues will change the eventual aggregate unit share price (eg. Ex-rights value per share) and the dividend payout/DPU (whether the shareholder subscribes to it or not).

Chart 1.jpg

Chart 3.jpg

Actually, the results took me by surprise. I am surprised that Straco Corporation Ltd is the overall winner (and I am not making any assumptions for the dividend payouts in the case of Straco).

The stock price of Straco has been under pressure in recent years. In fact, 2016 was not a year of growth for the company.


One reason for the stagnant stock price could be this:

The Walt Disney Company opened Shanghai Disneyland last year; many analysts have highlighted that this attraction could potentially pull plenty of discretionary income away from Straco’s Shanghai Ocean Aquarium attraction, which is also located in Shanghai.

Here Are 4 Things To Dislike About Straco Corporation Ltd As An Investor (read here)

Another point to note, even if we include the high dividend yield over the years, Mapletree Greater China Commercial Trust did not perform well – scoring only 30.4% profit.

The results of Croesus Retail Trust (9.4%) maybe a bit unjustified due to the lack of dividend payout in 2013, and my assumption for dividend payout in 2012. Do note that certain assumptions were made for the dividend payouts and initial stock prices for a number of the REITs as they were only listed in late 2012 and in 2013.

The lowest 2 scoring stocks are found in Group A (Croesus Retail Trust & Mapletree Greater China Commercial Trust). The 3rd lowest scoring stock is Vicom (Group B).

The top 2 scoring stocks are found in Group B (Straco and Raffles Medical). While the 3rd highest scoring stock is Mapletree Industrial Trust  (Group A). By the way, their returns over a 5 year period is way more than those of the STI ETF.


Question 2: Which stock has the highest dividend yield in relation to the original purchase stock price (from 5 years ago)?

Again, I am considering the total dividend received in FY 2016 as the final total dividend for consideration here. We do not have the FY 2017 dividend amount since we are only halfway through 2017.


Time is an important factor when it comes to good growing stock (with increasing dividend payout). Theoretically, the eventual yield of a good stock should be higher (and compound) in relation to the original yield.

Chart 2.jpg

From the figures above, it may seem that RHT Health Trust is the winner. However, its dividend payout in 2016 is abnormally high compared to the other years.

This is due to the Special distribution of S$0.248 in 2016, and it is non-recurring. In 2016, RHT signed a MOU to dispose 51% of its economic interest in FHTL to Fortis Healthcare (FHL) for S$300m (INR14.3bn). The disposal of the FHTL stake also resulted in RHT Health Trust declaring a special distribution of 24.8 cents per unit. (read here)

If we exclude this special distribution, the dividend payout for 2016 will be only SGD 0.0742, resulting in the ‘2016 Dividend Yield in relation to 8 June 2012 stock price’ to be only 9.2%.

So the winner here again is Straco (Group B), followed by Mapletree Industrial Trust (Group A) and RHT Health Trust (Group A) at 9.2%, respectively.

In general, for most of the stocks listed here (except for Croesus Retail Trust which has the worst eventual yield), their eventual dividend yield relative to the original purchase price of the stock is higher than the eventual yield of the STI ETF.


In summary

They say time will tell if the stock you bought is good or bad. Although we can’t foresee the future, studying the past helps us in forming our judgment moving forward.

Yes, we must always bear in mind that the dynamics in the future might change (eg. Interest rates rise, business fundamentals, new competitors, etc). Investing in stocks is never truly passive.


Nevertheless, this study is only limited to a few stocks and may not be representative of all the stocks in the Singapore market.  Moreover, certain assumptions were made for the dividend payouts and initial stock prices for a number of the REITs as they only listed in late 2012 and in 2013.

I am surprised that Straco Corporation Ltd came out top in both studies (Question 1 and 2). The winner this time seems to be Group B (Dividend Growth stocks). However, only time will tell which stock will be the eventual winner.

Shall leave with this song. Something to perk you up.


Posted in Dividend & Yield, Healthcare Stocks, Raffles Medical, REITS, Straco, Vicom | 2 Comments

Rock Solid Shares to start the year 2015 with – where are they now?


I have previously written a post in August 2015, about the status of the shares classified as Rock Solid Shares to start the year 2015 with by The Motley Fool (see below article by The Motley Fool).

  • Rock-Solid Shares to Start 2015 With (read here)

According to The Motley Fool as stated in the article above, the Great Ones which have impressive returns on equity without the use of heavy leverage are:

  1. Raffles Medical Group Ltd (SGX: R01),
  2. Silverlake Axis Ltd (SGX: 5CP),
  3. Kingsmen Creatives Ltd (SGX: 5MZ),
  4. Vicom Limited (SGX: V01)

Incidentally, Raffles Medical Group Ltd was also mentioned in the below article by The Motley Fool in August 2014.

  • Great Stocks To Buy And Hold For 20 Years (read here)

See below extract:

“According to Yahoo Finance, Raffles Medical Group Ltd  (SGX: R01), operator of the eponymous Raffles Hospital,  has seen its shares grow by more than four-fold (adjusted for dividends and splits) in 13 years from S$0.71 at the start of 2000 to around S$3.98 currently by providing a crucial and valuable service (healthcare) whose demand will likely never wane.”

In my August 2015 post, I mentioned that except for Raffles Medical Group Ltd, all the stock prices of the other 3 companies have dropped. Silverlake Axis has even requested for trading halts on 14 Jan 2015 and 21 Aug 2015.


A period of lesser than 8 months in holding on to any stock, to me personally, is relatively short.

I like to hold on to good stocks for many years. It allows for share price appreciation, passive dividend income build-up and a greater understanding of the companies (as I tend to read more on the development of companies which I am vested in). To put it in another way: To let time works its ‘magic’.

I have always been interested in these stocks.

We are coming to the middle of year 2017. Now it has been more than 2 years, since the release of the article by The Motley Fool. What is the status of these companies now? Both in terms of the share price performance and the business & financial performance.

“The big money is not in the buying and selling … but in the waiting.” Charlie Munger

Stock Performance

1) Raffles Medical Group Ltd


On 9 May 2016, there was a three-for-one share split for RFMD shares (eg. A shareholder that has Raffles Medical’s shares registered under his name on the books closure date will see every share he holds be split into three shares). Read here.

So accounting for the share spilt, the stock price of RFMD on 2 Jan 2015 is SGD 1.307. At the point of writing this post on 2 June 2017, the stock price of RFMD is SGD 1.365. So in terms of share price, there was a rise of SGD 0.058 or 4.4%.

However, as mentioned earlier in my post, one must consider dividend payouts. The total amount of dividend received from 2015 till today is SGD 0.25 (see below).

FYI, I multiplied the dividend received in 2016 and 2017 by 3 due to the share spilt.

RMG Dividend.jpg

So considering the dividend payout and share price appreciation, the total profit (if you sell at the price of SGD 1.365) is SGD 0.308 per share, and this represents a profit of approx. 23.6%. This is assuming you don’t reinvest the dividend.

Not too shabby for a ‘more than 2 years’ buy and hold strategy.

And out of this SGD 0.308 profit per share, dividend alone contributed 81.1% of it.

2) Silverlake Axis Ltd


The stock price of Silverlake Axis on 2 Jan 2015 is SGD 1.0625. At the point of writing this post on 2 June 2017, the stock price of SILV is SGD 0.54.

Note: SILV requested for Trading Halts on 14 Jan 2015 (read here) and 21 Aug 2015 (read here).

Just base on stock price alone, there is a drop of SGD 0.5225 or 49.2%.

Now let’s factor in dividend payout. The total amount of dividend received from 2015 till today is SGD 0.083 (see below).


So considering the dividend payout and share price movement, the total loss (if you sell at the price of SGD 0.54) is SGD 0.4395 per share, and this represents a loss of approx. 41.4%.

Unfortunately, the drop in share price is at such a big magnitude that the dividend payout did not help much (only approx. 8%).

3) Kingsmen Creatives Ltd


The stock price of Kingsmen Creative on 2 Jan 2015 is SGD 0.95. At the point of writing this post on 2 June 2017, the stock price of KMEN is SGD 0.615.

Just base on stock price alone, there is a drop of SGD 0.335 or 35.3%.

Now let’s factor in dividend payout. To me, KMEN’s dividend yield is on the high side. The total amount of dividend received from 2015 till today is SGD 0.08 (see below).


So considering the dividend payout and share price movement, the total loss (if you sell at the price of SGD 0.615) is SGD 0.255 per share, and this represents a loss of approx. 26.8%.

Again, the drop in share price is at such a big magnitude that the dividend payout did not help much (only approx. 8.5%).

4) Vicom Limited 


I am currently vested in this stock.

The stock price of Vicom on 2 Jan 2015 is SGD 6.26. At the point of writing this post on 2 June 2017, the stock price of VCM is SGD 5.690.

Just base on stock price alone, there is a drop of SGD 0.57 or 9.1%.

Now let’s factor in dividend payout. To me, VCM’s dividend yield is on the high side. The total amount of dividend received from 2015 till today is SGD 0.7325 (see below).


So considering the dividend payout and share price movement, the total profit (if you sell at the price of SGD 5.690) is SGD 0.1625 per share, and this represents a rise of approx. 2.9%. 

In this case, the dividend payout alone was able to mitigate the drop in share price and turn the loss into a profit. Though not a big profit :p.



2 of these stocks (Raffles Medical and Vicom) have managed to provide their investors with positive gains if they bought and held these stocks from Jan 2015 till now (if we include dividend payout).

This is better as compared to the case in August 2015, whereby 3 out of 4 registered losses.

Business & Financial Performance

Having looked through the prices, perhaps it is time to think about the business & financial performance of these companies. To be frank, I haven’t been tracking all four companies diligently.

1) Raffles Medical Group Ltd


Raffles Medical Group Ltd is a healthcare services provider.

It runs a hospital in Singapore, is currently developing a hospital in China (with an expected completion date of 2018), and has a network of medical facilities in 13 cities across five countries (Singapore, China, Japan, Vietnam, and Cambodia).

The company has delivered consistent revenue growth over the past few years.

In 2016, Raffles Medical reported a revenue increase of 15.4%. Net profit for the year stayed flat however, due to higher staff costs (for business expansion and acquisitions) and higher operating leases, among others.

For the recent first quarter 2017results (read here):

  • Revenue dropped by 1.7% over first quarter 2016. The marginal decline was due to softer than expected demand from foreign patients.
  • Profit After Tax and Minority Interests (PATMI) registered a marginal increase of 0.1% over first quarter 2016.

It seems that in recent times, the Group was able to contain costs and maintain its profitability, while still in expansion mode.

Moving forward:

Looking ahead, Raffles Medical expects its business to continue growing in 2017. The company also expects to complete the expansion of Raffles Hospital later this year (the hospital’s area would increase by around 80% after the project is completed).

The Group has acquired a plot of 28,000 square metres together with an in-construction building located in the Liangjiang New Area in Chongqing for the development of a 700-bed international tertiary hospital. When completed in 2018, RafflesHospital Chongqing will be able to serve local and expatriate patients in the western part of China as well as foreign patients from Central Asian republics.

Construction of RafflesHospital Shanghai has commenced and is proceeding smoothly.

2) Silverlake Axis Ltd


Silverlake Axis is in the business of developing technology solutions for banks, insurance companies, payment providers, and more. Its core capability is in providing banking solutions and over 40% of the top 20 largest banks in South-East Asia run the company’s core banking solution. Notably, one of our Singapore bank (OCBC) are also using Silverlake core banking solution since 1994.

Net profit fell in FY 2016, in relation to FY 2015, despite an increase in revenue.

sl 2.jpg

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Maintenance and enhancement services will remain as a key driver. As Silverlake Axis derives most of its revenue from this segment, as long as the banks keep using Silverlake Core Banking Solution(CBS), this segment would be relatively stable. Against the backdrop of a challenging economic outlook, the maintenance and enhancement service segment is likely to be the key growth driver in FY2017 moving forward.

Core business projects: Silverlake’s software licensing and project services declined 27% and 59% YoY respectively. This was amidst a challenging economy that saw banks looking to cut costs.

For the recent third quarter results (read here), revenue dropped 21% YOY, while profit attributable to shareholders rose 548% YOY to RM398.4 million!

This was due to an accounting gain of RM293.0 million from the initial recognition of retained interest in GIT as a financial asset at fair value as well as the gain of RM105.6 million on disposal of 12.4 million shares in GIT during the quarter, other income rose substantially to RM413.7 million in Q3 FY2017. If we exclude

If we exclude the above mentioned, the profit attributable to shareholders would probably be only RM 0.2 million, which is a drop of 99.7%.

Personally, I find SILV’s financial reports difficult to understand, and tend to stay away from this stock. Also I am not sure that the company has proved that it can grow organically.

Moving forward:

    • Silverlake has fully disposed its intended allocation-for-sale shares in Global InfoTech Co Ltd (GIT) and is to record an SGD267.7m gain while receiving 4 cents per share in terms of proceeds. Given the procedures needed for the proceeds to be transferred, this exercise would take some time to complete.
    • Management plans to put more attention into growing its insurance segment and may engage in some M&A activity in this space in the near term. Organically, this segment is already growing at a rapid 20-30% pa and the company has yet to expand its services across South-East Asia. However, Silverlake has already signed up the majority of the biggest insurance players.
    • Silverlake is in talks with a few Malaysian banks in relation to implement its software solutions to replace these banks’ existing core banking systems. Each of these contracts would potentially range around MYR150-200mil for each bank.

3) Kingsmen Creatives Ltd

kingsmen-300x250.jpgKingsmen Creatives Ltd is a company that provides services such as exhibition setups, interior design for retailers and corporates, and more.

Co-founder, Simon Ong, 62, stepped down as chief executive officer and group managing director on 1 July 2016. Consequently, Mr. Andrew Cheng (previously, the group chief operating officer), assumed the role of group CEO. While, Mr. Ong took up the role of deputy chairman, spearheading the strategic planning and development of the group as well as its creative standards.


2016 was not a good year for KMEN, Profit net of tax attributable to equity holders of the company fell from SGD 19.068 mil (FY 2015) to SGD 11.896 mil (FY 2016). While earnings per share dropped from 9.71 cents (FY 2015) to 6.02 cents (FY 2016).

The drop in profit of 38% year on year was mainly due to the one-off contribution last year from an exceptional item of $5.9m. Excluding that, the profits would drop lesser at 9.3% year on year.

Net Margin continues to struggle as the company continued to incur higher operating expenses, mainly from depreciation charges and salary charges, which continued to increase at 3.2% as a result of increment wages.

For the recent first quarter 2017 results (read here), revenue increased 7.7% YOY but total comprehensive loss attributable to equity holders of the company was lesser (by 78.8%) YOY at SGD 668,000. An improvement from the SGD 3.1 mil in first quarter 2016.

The better results was due to the increase in revenue YOY by the Retail & Corporate Interiors division and Alternative Marketing division.

Moving forward:

On 21 February 2017, KMEN management stated that, barring unforeseen circumstances, they expect FY2017 to be a profitable year.

Exhibitions and Thematic division continue to see growth as they ventured out to Middle East and China. Retail and Corporate Interiors will be the key to watch out for in coming years.

4) Vicom Limited 

top.jpgVicom Limited is a leading provider of vehicle testing and inspection services in Singapore. The company also provides a wide range of non-vehicle related technical testing and inspection services.

The company is majority-owned by land-transport giant ComfortDelGro Corporation Ltd.

2016 was not a good year for Vicom, revenue dropped 5.2% YOY due to lower business volumes, while Profit  Attributable to the Shareholders of the Company dropped 10.3% YOY.

In the first quarter 2017 results (read here), revenue dropped 4.9% YOY, again due to lower business volumes, while Profit  Attributable to the Shareholders of the Company dropped 6.4% YOY.

Moving forward:

Business conditions are expected to remain challenging for the Group. The vehicle testing business will continue to be faced with the high de-registration rate although this will be offset partially by the increase in the number of Certificate of Entitlement (COE) revalidations.

The non-vehicle testing business will continue to weaken with the general slowdown in the industries that they serve.


Raffles Medical continues to do well and managed to control its finances diligently while expanding.

For Silverlake Axis, Kingsmen Creative and Vicom, it is still an uphill task.

Hopefully, these Rock Solid shares will do well in the future. And not be like many of the media stars that only fade away into oblivion after a few years.

  • Where Are They Now? ‘Baywatch’ Edition (click here)
Posted in Kingsmen Creatives Ltd, Raffles Medical, Silverlake Axis Ltd, Vicom | 2 Comments

Work is better when you don’t need the money

I first came across the above statement when I was watching this talk by Frugal Guru Pete Adeney (from Mr. Money Mustache blog).

All my life after graduation, I have been in a job. In my 20s and early 30s, I worked really hard. Managed to pay off my student loan, HDB mortgage, got married and have 2 kids.

I did not really think much about whether I like my job or not. It was satisfying at times, shitty plenty of times…(kind of remind me of the relationship with my kids)…. but when you are busy, you seldom think about how much you love (or hate) your job.


Not too long ago, I came across these wo posts by fellow financial bloggers:

1) Is Your Work A Necessary Evil? (read here)

2) The Maths behind being Financially Independent with $1 million by Age 40 (read here)

And then there is this post:

3) Don’t do what you love for a career—do what makes you money (read here)

With reference to the 1st post from cheerfulegg (Is Your Work A Necessary Evil?), he asked the following question:

“So here’s the dilemma I’ve been pondering:

If you see work as a necessary evil, wouldn’t it be easier to simply find a more meaningful job than to struggle for many years towards financial freedom?

And if your work already has a meaningful purpose and you find fulfilment in it, why would you want financial freedom which is the option to quit your job?

I’m curious to hear from you:

How do you view your work – as a necessary evil, or having a deeper purpose? In either case, why is financial freedom still a goal for you?”

I reckon to me, the answer to the above question is found in the 3rd post (see below for extract from the post):

“And are we really so sure that the best thing to do with passion is attempt to monetize it, anyway? Why assume it’s easier to turn passion into money than it is to turn money into passion? Why not side hustle for love, and keep the filthy hands of commerce off our art or beloved hobby?

What if you don’t have a grand passion, anyway? Lots of people don’t. Hell, just keeping the lights on is a tall enough order for a vast majority of people.”

1st Question (Wouldn’t it be easier to simply find a more meaningful job than to struggle for many years towards financial freedom?)

  • Are you a zombie employee? Over half of Singapore companies have them (read here)

If you ask me, wouldn’t it be easier to find a more meaningful job? This word “meaningful” to me is relative. For instance, a doctor’s job to many may be more meaningful as compared to a banker’s job. A social worker’s job to many may be more meaningful as compared to a teacher’s job…. There is no end. There will always be a job that is more ‘meaningful’ than your current job. But then again, that is other people’s definition of ‘meaningful’ which I think is secondary.

Then there is your own perspective of what is meaningful. Or put in another way, your own passion (what is meaningful to you and the people around you).

However, what if you don’t have a grand passion (or meaningful work at least to yourself)? And even if you do, is it easier to turn passion into money than it is to turn money into passion?

  • If I like to draw. Would it be easier for me to make a living as an artist (A) than to have the money to draw whatever I like, whenever I like (B)?
  • If I like to teach: Would it be easier for me to make a living as a teacher (A), than to teach whatever I like, when I like and to whom I like (B)?

For (A), you can start right now, and do it until the end of your life. For (B), you would have to struggle first, build up your capital, become financially free then do what you like. (A) is fast with instant gratification, but life is beyond personal gratification (or having a meaningful job). (B) is slow, but you get much much more gratification at the end (well, at least more meaningful to you personally).

Which is easier? There is no right nor wrong in either way. Why complicate life (isn’t life already complicated enough)?

“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.” Warren Buffett

As mentioned in the 3rd post“Most of the life’s problems are intractable. Money is that rare problem that’s possible to (mostly) solve.”

Life is simply unpredictable. We fall sick, get into accidents – likewise for people around us whom we love …

Many things in life are unquantifiable. We can’t do an excel sheet and forecast what we will ‘get’ in the future (unlike cash deposits). We can write a thesis on having a ‘meaningful job’.

Must the word meaningful end with the word job anyway? I find the phrase ‘meaningful job’ kind of an oxymoron. Just have a meaningful life – period. Must ‘meaningful’ come with a price? Get price out of the equation. Price, sort of make a lot of things ‘meaningless’. Life does not equate to a job.


In the whole question above, there are 3 key phrases: “Meaningful”, “Job”, “Financial Freedom”. All are not easy to achieve. Yes, there are PEOPLE who are grateful just to have a JOB – where got the ‘luxury’ to ponder on whether it is a meaningful job or not, or think about financial freedom.

  • Unemployment could rise further as Singapore faces structural changes: Lim Swee Say (read here)

Among the 3, the hardest to achieve in life is “meaningful”. It is the hardest to quantify. It takes a lifetime to find meaning in life. You can start off your life like Forrest Gump; travel around the world (starting with Tibet) throughout your whole life to find meaning (and still don’t get it).


Why not tackle the solvable problem (like money) first? After all, a journey of a thousand miles begins with one step. And from a rational compounding point of view, the sooner you have money, the less money you need….. You know like in exams – you solve the easy questions first, before tackling the tough ones.

Likewise, if you work for money now, as opposed to passion, you’re generally in a better position to pursue your passion later on with no financial stresses.

This cannot be better illustrated by the 2nd post (The Maths behind being Financially Independent with $1 million by Age 40) from Investment Moat.

2nd question (If your work already has a meaningful purpose and you find fulfillment in it, why would you want financial freedom which is the option to quit your job?)

Back to the beginning of my post…. isn’t the feeling different if you work like you don’t need the money. Yes, your work has a meaningful purpose and you find fulfillment in it. But at the end of the day, who is the real boss here? In any endeavor, whether you are your own boss (self-employed) or you are an employee, there are bound to be bosses/clients/customers etc… There will always be a bigger fish.


Personally, I know how it is like to work when you have a 5 figure student debt and a 6 figure mortgage vs how it is like to work with ZERO debt (in exactly the same job).

When I am in the former (eg. in debt) my first thought wasn’t about meaningful or fulfillment ….Noooo….My first thought was about stopping the unnecessary ‘leaks’ and paying back the money. I may love my job, but I do need to rest when I NEED TO REST (like if I can’t work because I am sick for an extended period or if the people I love, got into trouble)… I am human after all.

When I am in debt, even if I am not doing anything, I am bleeding cash (in the form of interest payment – compounded more over time if I do not pay). I would much rather use the money for something more enjoyable like watching a show, having a nice meal, etc…

“When you make it back to zero, you’re like “I can join the Peace Corp. right now, nobody’s gonna track me down. I got choices again.”     Chris Sacca (who went from a US$4 million negative balance trading stocks, to a net worth of US$1.21 billion)

Of course, there are people who started out with no debt, was never in debt, never had the need for money (ever)…. rich parents, a big inheritance, great paying job, marry rich, etc…so they might not know the difference.

Indeed, we do need to think about the quality of life, beyond the meaningful purpose in work. Life is not just about working. The quality of life has everything to do with financial security and independence – a roof over our heads, healthy work-leisure balance, the means to fund our retirement and healthcare, the time and opportunity to pursue our dreams and passions – even as we provide for our families and help them realize their potential.

And oh yeah, there are parents who would literally kick their kids out of the house once they are out of school. Tough love, I guess. Or their parents have no house, to begin with…. :p

So basically, you are then forced to think about the quality of life first before having a meaningful job. On one hand, your choices are now more limited (basically one option – to find food and shelter), on the other hand, it sort of simplifies your life (no need to ponder about finding fulfillment first).


  • How long can millennials keep living with their parents? This isn’t sustainable (read here)

Life is also not just about ourselves. Life is bigger than that. Financial freedom isn’t just about the option to quit your job. Financial freedom is also about the ability to take care of others. Eg. I can have a fulfilling job, but if I can’t even pay for my aging parents’ medical bills to keep them alive and well, I think my life, in general, is not meaningful. When you are not free (financially), you might even drag the people around you down (when you are in financial troubles). Even though you did not intend it to be that way.

And if you managed to finish watching the talk by Frugal Guru Pete Adeney (which I mentioned at the beginning of my post), near the end of his talk, Pete mentioned about Elon Musk — and the word “Authenticity”. I think if you have no financial freedom, people and even yourself, at times might question, why are you doing what you are doing. Are you doing this out of love or money?


By the way, to me, this “Authenticity” isn’t about looking rich. Yes, you can appear rich eg. drive big cars, live in a landed property, go on expensive overseas trips multiple times a year, have lots of branded bags etc…. Sure people may gravitate towards you, but it won’t last. You may end up attracting the wrong kind of people anyway.

Indeed, it is about having enough financially. It is when your cash flow exceeds your expenses. Actually, you can sense some of the local financial bloggers who have this air of ‘authenticity’ eg. have more than enough and just want to help others.

With financial freedom, this question (why are you doing what you are doing) is simple to answer (even from an outsider). Financial freedom simply forces you to be truthful to yourself. It is ultimately better for you and for the people around you.

“Why am I am doing this Shit, when I don’t need the money… I am gonna do something I reallyyyyyyyyyyyyyyyy love. Something which I will feel fulfilled”

And oh, by the way, it takes a lifetime to find fulfillment.


As mentioned in the 3rd post: “Financial independence is an inherently rational goal—the “fuck off fund” carried to its logical conclusion. To a greater extent than most of us want to admit, you’re only as principled and independent-minded as your bank account allows you to be.”

Posted in Cash, Uncategorized | 2 Comments

My thoughts on this tiny stock: Singapore Kitchen Equipment (SKE) Limited

Singapore Kitchen Equipment (SKE) Limited is a tiny stock listed in the Catalist. It was only recently listed on the Catalist on 22 July 2013, and has a market capitalization of only S$24 million.

The Business

Singapore Kitchen Equipment (SKE) Limited, operating with the trade name Q’son Kitchen Equipment Pte Ltd (Qson), since established in Sept 1996, had gone from strength to strength, providing back end food preparation and cooking solutions.


The Group’s two key business segments are Fabrication and Distribution Segment and Maintenance and Servicing Segment.

  • Fabrication and Distribution Segment

Qson is a savvy fabricator of stainless steel products for the commercial kitchens, many of the processes which are automated for savings in resources and wastage reduction. Its assets consist of a factory space of 25,000 sq ft and 60 production workers.


The company is involved in the design, production as well as the import and distribution of the kitchen products and systems.


  • Maintenance and Servicing Segment

Qson considers itself as the leading kitchen equipment servicing company in Singapore, and claim that it had the pole position for many years. It stated that it has the largest skilled team of technical staff, numbering 87 with 29 vehicles.

All technical staff had undergone rigorous on-the-job training, classroom type and factory based training. And 80% of the technical team is certified by local authorities to carry out works safely and competently.

Revenue breakdown

As per the 2016 Annual Report, the Group’s revenue increased by S$0.2 million, from S$26.0 million to S$26.2 million in FY2016.

The current revenue mix of SKE consists of Fabrication and Distribution (76 percent at S$19.9 million), and Maintenance and Services (24 percent at S$6.3 million). For its Maintenance and Services segment, SKE currently holds the biggest market share in Singapore.


Cook Chill System, Productivity Driven Cooking

In this article, it was stated that management felt that their edge over their competitors, is the Cook Chill System suite.

“The brilliance of the Cook Chill System, is none other than the ability to cook food in advanced, freeze it, maintaining its nutrients encompassed within, and yet preserving the texture, quality, presentation and flavour of the food. All the cooking can be done at a central location several days before the food is consumed, stored in a special freezer that locks all the qualities of the food, and then re-heated up before it’s consumed. It saves time, labour costs, and drives effectiveness.

Although this concept was not very acceptable by Chinese kitchens and restaurants at first, management revealed that they are seeing a slow shift towards warming up to this idea as SKE do a lot of demonstrations and live presentations on this in hotels and restaurants’ kitchens. Management said that despite this uphill climb, they see potential in this.”

I am not working in the F&B sector, however, personally, I do believe that this Cook Chill method is not proprietary.


A quick search online revealed a number of other companies promoting this method albeit probably by using their own in-house systems. Nevertheless, the trend in Singapore does suggest that eateries could be using this system more in the future given the shortage of manpower and area for preparation, and many of SKE’s competitors have not

Nevertheless, the trend in Singapore does suggest that eateries could be using this system more in the future given the shortage of manpower and area for preparation, and many of SKE’s competitors have not caught on to promoting this method yet. More companies are opting for this system for the following reasons:

  1. Keep food quality and standard consistent,
  2. Maintain freshness of food,
  3. Quick and easy way to re-heat the food on the spot,
  4. Mass production in bulk using a central kitchen elsewhere (where rent is lower, and quality can be better controlled).

Macro trends in SKE’s favour

Let’s face it, Food is very much part of the Singapore culture. When we are overseas, we can’t help thinking about the local fares back home, we like to talk / blog / post photos of the food we eat, our food is, without a doubt, one of the main selling points of Singapore to tourists….

[F&B] Clark Quay-low res[2].jpg

And Singapore is among the top spenders in Asia Pacific for dining. In this report released in 2014, it highlighted that Singapore diners remain the biggest spenders in South-east Asia, and is second place in the Asia Pacific behind Hong Kong. Diners here spent an average of S$248 a month dining out in 2013. I am sure that figure would have risen by now in 2017.

And the above is not the macro trends I am talking about here. Personally, from how I see it, there are basically 2 macro trends that are in SKE’s advantage. See below.

1) Malls: Less Retail, More F&B

In the past, there used to be a higher proportion of retail shops as compared to F&B outlets. However, in recent years, consumer behavior has changed. The evolving purchasing habits of the younger generation of shoppers have disrupted this mall ratio.

Online shopping has become a very big problem for most traditional shopping malls. Why spend time physically walking around the malls looking for the stuff you want, when you can search for it from the comfort of your home? There are more variety and prices may be lower (plus free shipping)…

  • Mall bad news… but some bright spots (read here)
  • Allan Zeman Sees The Future Of The Mall As Less Retail, More Lifestyle And Entertainment Spaces (read here)
  • F&B concepts are shopping malls’ new ‘anchor’ (read here)

However, the need for ‘experiential’ social interaction and entertainment cannot be fulfilled by the internet. People can’t eat off the internet, so they still have to go out for entertainment and restaurants. Yes, there are numerous online food delivery companies eg. Deliveroo, Foodpanda, UberEATS, etc…. but all these can’t fulfill the desire for a nice, comfortable new social setting, where you and your friends or loved ones can come together for a nice meal.


Indeed, in Singapore, I do notice more F&B outlets sprouting out in the local malls.

  • New Five Food Way in Tiong Bahru Plaza (read here)
  • More eating and drinking, a little less shopping, in malls (read here)

See below for extract from this article.


So given the rise of the F&B sector in Singapore (at the expense of the retail sector), then shouldn’t we be looking at the F&B companies instead.

After all, in the tiny universe of our local stock market in Singapore, there are many listed F&B companies eg. Japan Food, ABR Holdings, Pavilion Holdings, Katrina Group, Food Empire, Breadtalk (Din Tai Fung), Old Chang Kee, Kimly, Jumbo, Neo Gardens, Sakae…. Isn’t it super obvious? Won’t these companies be the beneficiary of this macro trend?

Perhaps tooooo obvious. That brings me to the next macro trend, see below.

2) The high failure rate of F&B start-ups

I think, to many, after years working in the corporate world, their dream is to own a nice little quaint cafe or eatery, and be their own boss. No more working for somebody else, time to be your own boss. You get to set your own working hours, decide what to list on the menu and along the way, get to enjoy interacting with your customers, watching them enjoy what you have prepared.

Indeed, the F&B industry has a low barrier to entry. However, many new entrepreneurs are ill-prepared when they first start-up an eatery. Poor planning and the manpower issues are some of the reasons why

However, many new entrepreneurs are ill-prepared when they first start-up an eatery. Poor planning and the manpower issues are some of the reasons why almost half of all eatery start-ups fail.



  • Many eatery owners fail to do their homework (read here)
  • Running cafes no piece of cake (read here)


Back to my earlier question: Why don’t we focus on investing in F&B players instead.

As much as I like the F&B companies, the fact is, operating a typical F&B outlet (cafe, restaurants, food court, coffee shops, etc) in Singapore is extremely tough. The Singapore foodie customer is fussy and fickle.

With the high rents, tight labour market and the many competitors… it is simply tough operating eateries in Singapore. This applies not just to start-ups but also established F&B players.

  • Sakae to cut 6 more eateries as it gets set to roll abroad (read here)
  • 5 Food Places That Are Closing In 2017 — So Get To Them Soon (read here)

I have previously written a blog post pertaining to Japan Food (read here) in June 2015, and in it, I quoted the Executive Chairman and Chief Executive Officer of Japan Foods, Mr Takahashi Kenichi who mentioned that “the operating environment has become increasingly challenging due to stronger competition and higher business costs”.

We often hear about the success stories, but few would like to share their failure stories. To many, running their own eateries will always remain just a dream. But that does not stop many from trying.


Nevertheless, like any competitive industry, it is not the main players that are the main beneficiaries… it is the ‘pickaxe’ companies. These are the ‘secondary tier’ sister companies supporting the main players.

Think ComfortDelGro (Main) and Vicom (Pickaxe), SIA (Main) and SIA Engineering & SAT (Pickaxe), Samsung / LG / Sharp / Apple (Main) and Corning glass (Pickaxe).

  • Seeing the world upside down (read here)

In fact, the more competitive the industry is, the more lucrative it is for the “supporting” companies.

Incidentally, Neo Group has invested in SKE.

  • Neo Group invests in Singapore Kitchen Equipment Limited (read here)

And I do believe, Singapore Kitchen Equipment happens to be in such a ‘lucrative’ position. Whether the eateries survive or not, they still need kitchen equipment. Perhaps a higher failure rate for eateries might even mean more business for its Fabrication and Distribution division. :p


As mentioned earlier, Singapore Kitchen Equipment Limited was only recently listed on the Catalist on 22 July 2013.

The stock is thinly traded (low liquidity). Free float of 14.83m vs Shares outstanding of 150.00m. Basically the free float is less than 10% of the shares outstanding.


To get an idea of how thinly traded this stock is, see below extract from the 2016 Annual report:


In total, there are only 347 shareholders. To get a better sense of perspective, Vicom, another thinly traded stock, in their 2016 Annual Report states that they have 3,154 shareholders.

At at the current SKE stock price of $0.16, with $1,600, you can be on of the ‘major’ shareholder :p Just kidding.

The company is majority owned by the management: Chua Chwee Choo Sally (Managing Director), Lee Chong Hoe Alan (Executive Director) and Cheng Chun Choi Frankie.


From the above, there are 2 ways to see this:

The good:

  1. As the company is majority owned by the management, it is likely that the interests of the management are aligned with that of the minority shareholders.
  2. The low liquidity often reveals inefficiency in the price (price swings are lumpy), and prices could at times swing far from the true value. Also, the stock could have been overlooked by most institutional fund managers or analysts. This allows opportunities for retail investors.

The bad:

  1. As there are low liquidity and a low percentage of free float, it would easy for the major shareholder to privatize the company during market corrections or crashes esp. when the price is low and below NAV. Forcing the minority shareholders to sell at a un-favorable price (favorable if taken into context of the market crash and general negative market sentiments), even though they have holding power. It disrupts the buy and hold long term strategy.
  2. And oh yeah, this is not the kind of stocks traders look for. Not the kind of stock for Options or Derivative trading. Hardly any movement in the stock price.

Financial Fundamentals

Singapore Kitchen Equipment2.jpg

Looking at the above figures:

The bad points:

  1. In terms of valuation, Price/book ratio is high (>1).
  2. The current ratio at 3.49 is too high. A high current ratio can be a sign of problems in managing working capital. (Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses).

The good points:

  1. In terms of valuation, PE of 9.41 is low. Although, price to book is slightly high eg. >1.
  2. In terms of Management effectiveness, the figures are respectable. Not as good as I would like it to be eg. ROE>20%. But mid to above average.
  3. Balance sheet wise: With a total cash of SGD9.2M vs total debt of SGD1.3M, thus leaving the company to be within an overall cash position of SGD7.9M. BUt as highlighted above, the current ratio is too high.
  4. The dividend yield is good at 3.13% with a payout ratio of only 43.81%.

Historical financial data

Singapore Kitchen Equipment.jpg




In general, excluding FY 2012, the trend has been up.

Trailing PEG and Intrinsic Value
Let’s do a quick study on the current share price of SGD 0.16 – via Trailing PEG and Intrinsic Value.

However, before we continue, please note that the data available is insufficient (the company is only newly listed) – so whatever conclusion arrived is highly inaccurate.

1) Trailing PEG

P/E: 9.41
Dividend Yield (%): 3.13
3 years EPS compound growth rate: 184.94 (I used 3 years, as the 5 years data is distorted by the unrealistic value in FY2012).

The trailing PEG will be 9.41/(3.13+184.94) = 0.05. Which is good (below 1).

2) Intrinsic Value

If we calculate the intrinsic value using a growth rate of 100%. (Discount of the 3 years EPS compound growth rate which is 184.94%)

F = P(1+R)N

  • F = the future EPS
  • P = the starting (present) EPS (SGD 0.02)
  • R = compound growth rate (100%)
  • N = number of years in the future (5)

Estimated future EPS: 0.64

I will be estimating the future PE of SKE to be 9.4.

Future Stock Price


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

Hence future stock price of Sarine is 0.64 x 9.4= SGD 6.016

Intrinsic Value


  • P = present (intrinsic) value
  • F = future stock price (6.016)
  • R = MARR (15% or 0.15)
  • N = Number of years (5)

Hence intrinsic value of Singapore Kitchen Equipment Limited is SGD 2.99

Given the current stock price of Singapore Kitchen Equipment Limited on 25 May 2017 is at SGD 0.16, there is a big margin of safety (94%) base on the estimated intrinsic value.

Well, anyway the historical financial data is just insufficient to make any conclusive forecast. Shall monitor the company more.

On another note, I personally feel that investors need to develop an ‘edge’. The fact is, information and data are everywhere. We are swarmed with information constantly. However, having current and correct information though important is not give us investors an edge. It is having a second (or third) level of thinking, to see things differently and rationally. OK go figure…. :p

  • Second-Level Thinking: What Smart People Use to Outperform (read here)

Check this out!

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Columbus Direct specialises in travel insurance and we only sell the products that we know best. Please click here.


GoFresh takes pride in sourcing the highest quality produce and delivering them to our customers’ doors with unbeatable value. Please click here.


Posted in Singapore Kitchen Equipment Limited | Leave a comment

Review of Quarter Results (Vicom, Riverstone, ISOTeam, Colex, Sarine Technologies & Golden Agri Resources)


Actually, I am quite an impatient person. Perhaps it is because of my job, or me living in fast pace Singapore where everything is about efficiency, or it is just my character…. However, I feel that I might have mellowed down over the years.

When it comes to investing, I think I have definitely ‘mellowed down’… I seldom trade, I read more and basically just wait most of the time. Investing in a way has made me very patient – the kind of patience found in watching the ‘wall paint dry’. At some time, it can be painful (even to a grown man).

Over the past months or year, even if I find an ‘undervalued’ stock, I would pause and think what if a better opportunity presents itself. This is against the backdrop of the rising markets in the US. In retrospect, I did miss some good opportunities.

Technically, a true bottom-up investor would invest irregardless of the market conditions and base his investing decision on the company’s stock intrinsic value… In fact, I would be happy to do just that (invest in undervalued stocks) a couple of years ago.

However, at the moment, I do believe that waiting for the ‘storm’ to come and invest would do more good to my net worth (from a long term view perspective). Or to put it simply, at this moment I feel preservation of capital might be a better strategy. Not much fear in the market.

To invest when others are fearful would allow you to ‘catapult’ your overall net worth in absolute terms.


Company Quarter Earning Results

I have been reading up on the companies which I am still invested in – basically their recent earnings results. The number one reason why I feel I need to get up to date with their results and development is basically so that I know what I have invested in, and not to sell base on unfounded fear (when stock prices plunge).

Having said that, a quarter is a short period, and I would probably need to study many quarters (and annual reports) in totality to better understand the company.


1. Vicom

Basically, the 1st quarter results (read here) showed a slight dip as compared to last year 1st quarter’s results. Profit after taxation decreased by 6.4%. This is not unexpected: Due to lower business volume.

They have, in view of the lower revenue, further cut staff cost, utilities and communication cost.

In terms of outlook, things have yet to change for the better. This is as stated in the report: “The vehicle testing business will continue to be faced with the high de-registration rate although this will be offset partially by the increase in the number of Certificate of Entitlement (COE) revalidations. The non-vehicle testing business will continue to weaken with the general slowdown in the industries that we serve.”

The vehicle testing segment to me is a given – you basically know the deregistration figures before they hit.

As for the non-vehicle testing business (SETSCO), its percentage of the total revenue is more. If I am not wrong, it contributes at least 60% of the revenue.

The business of SETSCO is pretty diversified: SETSCO offers testing, training, inspection, consultancy, and product certification to a list of diverse fields in civil engineering, environment, building construction, electrical, industrial equipment & machinery. This is harder to gauge… but nevertheless, its services are critical, and I don’t foresee much adverse disruption (except for the overall economy slowdown).

Vicom has been very good at cutting cost (staff cost esp.) in light of the lower revenue and this has sort of cushion the impact. I do not foresee profit to fall off the cliff, and it is good to hold until better times come along (after all, the high de-registration rate does no last forever. And even electric vehicles need to be tested).

I do not foresee profit to fall off the cliff, and it is good to hold until better times come along (after all, the high de-registration rate does no last forever. And even electric vehicles need to be tested).

2. Riverstone

The FY 2016 result (read here) wasn’t as good as what I would have expected. There was a 4.9% YOY decline for the Profit attributable to the Equity holders of the Company (despite an increase in revenue).

This decline is mainly attributed to the 2 factors:  higher raw material prices and less favorable foreign exchange fluctuations (the weakened US Dollar against Malaysian Ringgit had yielded a negative impact on the Group’s financials for FY2016).

I don’t consider these 2 factors as fundamental weaknesses within the company itself. Nor are they permanent. Nevertheless, there was an impact on the stock price.

Moving forward, things seem to change for the better (or back to the norm) – where good quarterly earnings results are reported. For 1st quarter 2017 (read here): Net profit increased 23.7% YOY from RM27.2 million for 1QFY2016 to RM33.6 million for 1QFY2017.

Phase 3 expansion has added billions of gloves to the production output. While Phase 4 expansion has begun and Phase 5 expansion is planned. Simply put, annual production capacity might increase from 6.2 billion pieces of gloves at end FY 2016 to an anticipated 10 billion pieces of gloves by end FY 2019.

That is a whole lot of gloves and a giant leap in the expansion… with a growing revenue to show for it. The ability for Riverstone to differentiate its products in the commodity-like business with a potential oversupply (eg. customising their solutions to better suit customers’ needs) seems to be working very well.

Riverstone’s competitive advantage in its cleanroom gloves segment, which commands a much higher profit margin than the medical gloves business also seems to help.

RIVERSTONE: Stretches Limits with Breakthrough Technologies (read here)

3. ISOTeam

I sort of re-read their 3rd quarter results (read here) released on 11 May 2017 a couple of times. Reason being: the results is not that straight forward (as compared to the earlier 2 companies – Vicom & Riverstone).

No doubt it was a set of stellar result eg. there was an increase of 18.9% for the Profit attributable to the Equity holders of the Company (as compared to the previous 3rd quarter in 2016).

The thing that is unusual is that the quarter’s revenue actually dropped 17.3% yoy, while profit before tax dropped 36.1% yoy, despite the increase in the profit attributable to the Equity holders.

The decline in revenue was due to its core Repairs and Redecoration (R&R) business, which had faced intense price competition. However, this was partially offset by the performance of its Addition & Alteration (A&A) and Coating & Painting (“C&P”) segments, which have continued to gain traction in revenue generation.

FYI between FY 2015 to FY 2016, the percentage of revenue contributed by R&R declined from 67% (in 2015) to 43% (in 2016). And between HY2016 to HY2017, the percentage of revenue contributed by R&R declined from 54% (in 2016) to 24% (in 2017).

In comparison to the previous quarter last year, there was a huge decline in the tax expense ($813K in 3Q16 vs S19K in 3Q17). Without this, the Profit attributable to the Equity holders would not have increased.

As stated in the report:

“3QFY2017 vs 3QFY2016 & 9MFY2017 vs 9MFY2016

Tax expenses The Group’s tax expenses decreased by $0.8 million or 102.3% from tax expenses of $0.8 million in 3QFY2016 to tax credit of $0.02 million in 3QFY2017 and decreased by $0.5 million or 34.5% from tax expenses of $1.5 million in 9MFY2016 to $1.0 million in 9MFY2017 were mainly due to the decrease in deferred tax and income tax expenses after utilisation of tax subsidies schemes.”

I am not too sure about this tax subsidies schemes but I reckon it could be the Wage Credit Scheme (WCS) by IRAS. Note: There was an increase in non-current liabilities for this quarter, this was attributed to the increase in deferred tax liabilities of $0.8 million.

On another note (though more minor): “ISOTeam’s cash and bank balances stood at S$19.4 million as at 31 March 2017 as compared to S$34.1 million as at 30 June 2016. The decline was mainly due to the Group’s M&A-related activities and the purchase of property for Head Office. Gearing remains manageable at 0.6 times.”

Outlook wise,  the Group expects market conditions in the next 12 months to remain challenging.

Personally, I feel that the decline in the R&R (Repairs and Redecoration) revenue is a concern, as I like the segment due to its stable recurring nature. Sadly, Quarter to Quarter, there was a 45.5% decline in R&R revenue.

And it remains to be seen if these tax subsidies schemes are recurring – if it is not, the effect on next quarter’s earning results would be bad. Reading about the Wage Credit Scheme, I do believe the subsidies would end in 2017 (eg. not recurring). So unless there is an improvement in the R&R segment (and correspondingly, the revenue) — the quarters in 2018 will be impacted adversely.

The aggressive expansion in the near term is taking a toll on the balance sheet/cash hoard (though still strong) – and results are not immediately apparent. Hopefully, there are some price advantage and economy of scale as a result of the synergy via the M&A and which may help the R&R division in tendering at lower prices. Hopefully, ISOTeam uses their IPO proceeds and share capital wisely.

It is, after all, a dog eat dog world – and the stock market is not kind to lousy companies.

I may be wrong here, but I believe that the overall slowdown in the construction industry could have an adverse effect here – well at least in the R&R segment. Some of ISOTeam’s competitors could be contractors involved in the wider construction sector here (eg. doing new buildings. Not pure ‘maintenance’ contractors)… and with the slowdown overall (despite the increase in public sector projects), these companies may have resorted to price cutting (price bidding wars) in the R&R tenders, so as to have projects just to keep their otherwise idle workers occupied.

So in summary, despite the headline good news – the outlook is not really that bright and sunny. Stock price wise, year to date – there was an overall decline (overall downtrend). I have a small position in ISOTeam, and so far the stock price has risen quite significantly from my original purchase price, however, I don’t intend to add to my holdings in the near future.

Having said that, ISOTeam was only recently listed, so for me, it is baby steps when it comes to investing in this company.

4. Colex

I always find Colex’s quarter earning reports very brief, literally just one page.

The first quarter results are not good (read here):

“Segment profit (hereinafter refer to earnings before interest, tax, depreciation and amortization) of S$2.704 million for 1Q2017 decreased by 26.8% from S$3.695 million for 1Q2016 mainly due to the lower revenue and government grants.”

Basically lower profit was due to fewer contracts secured (resulting in lower revenue) and lower government grants.

It is impossible to know to actual extent or impact of the various factors by looking at Colex’s report (well, like I said earlier, it is super brief). So I took a peek at 800 Super Holding Limited’s first quarter earnings report :p (read here). 800 Super and Colex are both local waste management companies. They (800 Super) too have a bad quarter (17% drop in net profit YOY). The main culprit is:

Employee benefits expense

Employee benefits expense increased by S$1.5 million or 9.3% from S$16.4 million in 3Q2016 to S$17.9 million in 3Q2017. This was mainly due to a decrease in government grant under the Wage Credit Scheme of S$2.7 million, partially offset by a decrease in salaries and bonuses of $1.1 million in line with a lower headcount.”

I can’t say for sure if this is the main factor in Colex’s case… but I guess it won’t be far different (esp. when it comes to the extent of the government grant for these 2 companies). In both Colex and 800 Super’s case, the decrease in first quarter’s revenue is not much (2.7% and 2.1% respectively YOY).

Personally, I think Colex’s situation is the opposite as compared to ISOTeam’s situation. In Colex’s case, the fundamental business is doing ok (well – a 2.7% yoy decline in revenue due to fewer contracts – that is not much).


5. Sarine Technologies Ltd

For the first quarter results (read here), despite the increase in revenue (+5% yoy), there was a decrease in net profit (-17% yoy).

2 main reasons for the decline in net profit then:

  • In order to support continued growth and the launch of new services, higher operating expenses were incurred in Q1 2017.
  • The increase in expenses was compounded by the 5% strengthening of the Israeli NIS against the US dollar.

I do not view the above as permanent issues.


For the first quarter, net profit increase 17% yoy, while revenue increase 7% yoy (read here).

The outlook seems to be getting better: The positive business conditions in the diamond industry are likely to persist in FY2017….“We have a number of significant successes in the APAC region and the list of new customers include two new chains in Japan, K-Uno and Sadamatsu, and a large buyers’ group in Australia, Leading Edge Group,” commented Mr. David Block, the Group’s newly appointed CEO. “We intend to double the number of stones scanned for Sarine ProfileTM in 2017 and expect its contribution to account for around 5% of group sales this year,”

I always felt that Sarine Tech’s business (in comparison to the other companies in my portfolio) is more unpredictable. There are years with extreme good growth and then there are years with lousy results.

Nevertheless, the company has been good at navigating through the bad years (by promoting their products) and they did actively buy back shares when prices drop. And then there is the recurring nature of their earnings which I particularly like:

Overall recurring income accounted for approximately 42% of total revenue, with trade revenue derived from the polished diamond line of products and services representing about 2% of total revenue in Q1 2017.”

Hopefully, the current uptrend (increased capital equipment sales and higher recurring revenues) continues.

6. Golden Agri-Resources Ltd

Well, I actually read about Wilmar’s good quarter earning results (read here) before looking at Golden Agri quarter earning results (read here). So you can guess my disappointment.

There is a decrease of 60.1% in Net Profit attributable to owners of the Company yoy, despite an increase in revenue (37%) yoy. The main culprit is the loss on foreign exchange during the three-month period ended 31 March 2017 as opposed to a gain in the same period last year.

I guess that is the currency risk of investing in a company whose operations are in a foreign country (eg. Indonesia) and its monetary assets are in Indonesian Rupiah.

“The net foreign exchange gain in 1Q2016 was mainly due to translation gain on Indonesian Rupiah (“IDR”) denominated monetary assets as IDR strengthened significantly against USD during the previous period, as well as fair value gain on forward foreign currency contracts entered to hedge the currency exposure of Malaysian Ringgit (“MYR”) and IDR.”

Nevertheless, there was an overall improvement in the company and the CPO prices. The overall improvement was mainly driven by higher average crude palm oil (“CPO”) price and the recovery in palm production.

I am well aware of the cyclical nature of the business/industry.. and after many years of the downtrend in CPO prices (even before the collapse of crude oil prices) – CPO prices has marginally improved. Again, like Sarine Tech, I hope the uptrend continues. I do not consider forex risks as a permanent fundamental issue with the company.


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Posted in Colex, Golden Agri, ISOTeam, Portfolio, Riverstone, Sarine Technologies Ltd, Vicom | Leave a comment

oBike (Bike sharing, the good, the bad)

I previously did a post about my experience with oBike. It has been only a few days since that post – and just a short update. I have been using oBike occasionally. Sometime, after work, during weekends, the holidays…etc.

Frankly – I have not spent a single cent on it (except for the $49 deposit, required for the use of oBike bicycles). For the past 2 weekends and holiday – there are promotions for free rides.

And seems like it will be free again to ride oBike bicycles this weekend again (read here).

Why oBike?

1) If you haven’t noticed… I reckon the number of oBike bicycles exceeds the number of Mobike and ofo bicycles. Well, I could be wrong. But from where I live, I tend to see more oBike bicycles.

I do not like to spend time looking for bicycles. This defeats the purpose of using a bicycle eg. getting from point A to B fast. The distance between point A to B are usually short – takes less than 15mins to travel using a bicycle.

2) I do not like to spend another $49 as a deposit in the Mobike App.

3) ofo bicycles are hard to find (you can’t locate an ofo bicycle using your handphone App).

4) I find that the size of the ofo bicycle a bit small for me. In the case of Mobike bicycles, I can’t raise the height of the seat. Oh yeah, I tend to raise the height of the oBike seat pretty high – makes cycling easier.


To put it in another way, if given the choice, and if there are as many Mobike bicycles as there are oBike bicycles, and if the seats of Mobike bicycles are adjustable (can be raised or lowered) – I would definitely choose Mobike – simply because they are lighter.

Weight is the main flaw of oBike. It is heavy. And it is really tiring cycling uphill (and at some point almost impossible to cycle up).

If given the choice traveling from Point A to Point B and Point B is topographically higher than Point A, I will take the bus or MRT from Point A to Point B and cycle back from Point B to Point A (downhill)… 😛

Seems like oBike has been listening to its customers – they have introduced 1,000 new lighter bicycles on Wednesday, 10 May 2017 (read here).


The Problem

With the introduction of these bicycles (ofo, oBike, Mobike) – I do start to notice some problems. The ugly side of Singaporeans starts to surface.

1) People start to hoard free bicycles for their own use. I don’t know how many ofo bicycles there are, but I reckon there are 2 reasons why I seldom find ofo bicycles.

Reason 1: There ought to be less number of these ofo bicycles as compared to oBike bicycles (or even Mobike bicycles).

Reason 2: Some people have been keeping these bicycles for their own use. Eg. chain the bicycles infront of their flat. After all, people can’t locate the ofo bicycles using the ofo app and it is free to use (for now).

2) People don’t take care of ‘free’ stuff. Ok, I may be wrong – but somehow I feel that if you put a price tag on something – people tend to ‘respect’ it more and treat it better. But if it is free… people just don’t value it.

There are cases of people abusing the bicycles (esp. ofo bicycles). Painting over the frames, removing the numbers, throwing them into canals, etc.

  • Bike-sharing firm oBike to lodge police report over bicycle left in canal (read here)
  • Not 1, not 2, but 3 cases of ofo bike abuse all in a day at Serangoon (read here)
  • S’pore lady sees ruined Ofo bike, brings it home, dad fixes it. Family wins. (read here)

3) The third problem seems more widespread and problematic (harder to tackle). And that is the haphazard indiscriminate parking of these bicycles. eg. inconsiderate driver parking indiscriminately for his or her convenience.


Although operators of bike-sharing services have imposed penalty schemes to deal with inconsiderate users, examples of rogue behaviour continue to appear.

  • Adding racks, designated zones among ideas to curb indiscriminate bike parking (read here)

Like pimples sprouting out from the face of a teenager, I am starting to see bicycles (oBike, Mobike, ofo) parked in the middle of nowhere: Next to bus stops (probably from home to bus stop to take the bus), traffic islands (between two road crossing), along pathways, just below slopes outside the HDB estate (the person probably doesn’t want to cycle up and park in HDB void deck), outside condos, etc… There are no bicycle racks or marking on the ground stating these are bicycle parking areas.

And as stated in the earlier article linked: “oBike plans to expand its fleet to between 10,000 and 20,000 bikes “in the next months”, up from 1,000 in February.”

With that many more bicycles – will there be enough ‘infrastructure’ eg. bicycle racks or designated parking areas for these new bicycles. And will the users display good etiquette and park the bicycles at these designated areas (even if it meant that cycling a few meters more, or cycling uphill….)?

Enforcing this would be even more difficult. Even existing parking areas might not have sufficient parking racks or areas and this will lead to even more ‘dumping’.

  • More bike parking zones islandwide (read here)

As it is – these bicycles are popping up in random places.

Will Singapore end up with the problems faced by China? After all, Mobike and ofo originated from China.

  • China’s Bicycle sharing WENT INSANE! (click here)


Somehow I feel, sad to say if there is no fine or penalty, rules are hard to be enforced.



Posted in Bike Sharing | 2 Comments

Singapore O&G Ltd (Questions about this healthcare services provider)

I previously did a post on Singapore O&G and TalkMed. I ended that post with a preference for Singapore O&G.

Nevertheless, I feel that since both firms are only recently listed on the Singapore Stock Market, and given their relatively short financial history (made available to the public), it would be hard for anyone to make a good guess on their future performance.

In addition, the operation of the company is highly reliant on medical practitioners (healthcare service providers) – which I feel is more unpredictable as compared to a company supplying healthcare products. Then again there are very successful listed healthcare service provider companies such as Raffles Medical Group. So I stand to be corrected.


Recently, I have been reading up on articles about Singapore O&G (SOG). I re-read their SOG 2016 Annual Report, online articles on SOG and posts about SOG in the Value Buddies forum.

I always find the posts in Value Buddies interesting – there are always views from a different perspective. The posts in Value Buddies about SOG are pretty outdated (most are dated around 2015 – around the period during SOG’s IPO). Still, I always find the posts in Value Buddies in some way relevant and thought provocating.

SOG Annual Report was well done. FYI SOG won the Best Annual Report Award (Merit) under the First Year Listed Company category awarded by the Singapore Corporate Award 2016. (see page 18 of the 2016 Annual Report)


High Dividend Payout

I am sure this would probably be on most investors’ minds. In fact, I think many of the investors who subscribed for its IPO back then was attracted to SOG’s aim to pay out 90% of its net profit.


As stated in SOG 2016 Annual Report: “While SOG does not have a formal dividend policy, the Company targets to pay up to 90% of its net profit after tax for each financial year.”

This 90% payout was again raised during the recent AGM by one of the shareholders: “Mr. Chong Kok Weng further enquired on the dividend payout as stated on page 14 of the Annual Report and whether the Group will continue to pay up to 90% of its profits. Dr. Ng clarified that the current dividend payout policy is an ‘unofficial’ policy approved and adopted by the Board of Directors.

From an investor point of view, I find this 90% payout both at the same time odd and tantalizing. By the way, just for your information, I am not vested in SOG stocks.

Why odd? Well, one must first understand why a company wants to be listed. There are many reasons why a company wants to be listed, but the overarching reason as stated in this online article is to raise money: “The main reason companies decide to go public, however, is to raise money – a lot of money – and spread the risk of ownership among a large group of shareholders. Spreading the risk of ownership is especially important when a company grows, with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company.”

This capital raised can then be used to fund research and development, fund capital expenditure or even used to pay off existing debt. Another advantage for listing is an increased public awareness of the company because IPOs often generate publicity by making their services or products known to a new group of potential customers.

So why raise money only to pay out most of the profits to passive shareholders (not that they are complaining)?

This is not a REIT, whereby the dividend policy states that it must pay out at least 90% of net income after tax. I like to think that SOG is a growing company (at least that is what I have gathered from what I have read from the Annual Report – see below). In fact, I did invest in a number of newly listed companies back in the past (and am still holding on to their stocks) ….eg. ISOTeam, Riverstone… and typically they do not pay out most of their earnings. Understandably, they need capital for their expansion.


This question was also raised in this article by The Motley Fool, dated 28 May 2015: “In Singapore O&G’s case, the fact that it has chosen to not retain most of its earnings to fund future growth and yet has earmarked the bulk of its IPO-proceeds for just that purpose (to fund future growth, that is) does raise some questions about management’s capital allocation chops and the rationale for the IPO.”

I can’t find an answer for the above… but I do suspect this 90% pay-out is unsustainable. There are a number of reasons why I think so. One being the depletion of the IPO proceeds (see extract from the 2016 Annual Report – page 130).


Basically, SOG has already utilised 100% of the IPO proceeds set aside for investment in healthcare professionals and synergistic businesses.


Refer to page 166 of SOG 2016 Annual Report:

The total purchase consideration on for the acquisition of JL Group is S$28,294,630 and the breakdown is as follows:

  1. S$15,217,480 in shares
  2. S$14.0 million in cash payable in three tranches:
(a) First tranche of S$6.0 million paid on 1 January 2016,
(b) Second tranche of S$4.0 million (fair value of S$3,540,558 as at acquisition on date) due on1 January 2017, and
(c) Third tranche of S$4.0 million (fair value of S$3,536,592 as at acquisition on date) due on
1 January 2018.

As the 2016 Annual Report Financial Statements is for the financial year ended 31 Dec 2016… item 2(b) was not captured. After utilising S$6.401 mil, they still need to utilise S$7.6 mil cash ($8 mil minus dividend payout to Dr. Joyce) to pay for the acquisition of JL Group. By now SOG ought to have paid S$4 mil (out of this S$8 mil) in the second tranche. Now, where will the money come from?

Refer to page 177 of 2016 Annual report: “Subsequent to the end of the reporting date, the Company paid the second tranche purchase consideration, S$3.8 million in cash (S$4.0 million less final dividend received by Dr. Joyce Lim of S$0.2 million for the Acquisition of JL Group)”.

In addition, SOG did not manage to achieve 90% payout in FY 2016.

Refer to Page 128 of the 2016 Annual Report: “In FY 2016, the Company had paid dividends of 83.9% of the Company’s net profit after tax to the shareholders” 

It could be a short-term tactic meant for the IPO listing. To many, the most attractive feature of the new listing is its dividend policy.

Why list company?

Reading the posts in Value Buddies, this is also another question discussed quite frequently. When thinking about this topic, the spotlight inevitably falls on the 3 main stakeholders (Dr. Lee Keen Whye, Dr. Heng Tung Lan, and Dr. Beh Suan Tiong) at the time of the IPO.

After all, the success of SOG business is highly dependent on the commitment of their Specialist Medical Practitioners.

What if a Rainmaker leaves?

The idea that this listing is basically an Exit Strategy by these 3 doctors to cash out was bounced around in the forum. This is quite possible.

I always felt that running a successful practice alone is a double edge sword. On one hand, you reap what you sow. As the (only) founder, you get to keep most of the profits because of your own hard work… but once you retire, the company cease to exist. It dies with you – and the people who work for you would have to look for work elsewhere (or become jobless). The income stops (not that it matters if you are already rich)… but what if you can still maintain some income, part of legacy lives on while your staffs continue to have the same jobs?

The age of these 3 doctors then come into question: “Are their most productive years again behind or the best is yet to be? Are the older doctor-owners preparing a legacy for their offsprings with this IPO as the main motivation?”

As well, as their financial status and success (after all as stated by one person in the forum, Dr Heng is already very successful – famous in the East side of Singapore, and rich). She might be doing this beyond monetary reward eg. higher level of achievement – creating a legacy.

  • Dr. Lee Keen Whye: Age: 62. Total Calculated Compensation for 2016: $500,318. (read here)
  •  Dr. Heng Tung Lan: Age: 59. Total Calculated Compensation for 2016: $1,201,838.  (read here)
  • Dr. Beh Suan Tiong: Age: 53. Total Calculated Compensation for 2016: $514,570.  (read here)

Now, back to my previous post, there are pros and cons on depending on a few star doctors. But one major fear by many investors is that the founder stakeholder decides to cash out (and leave the organization) leaving shareholders holding the basket. The issue of he/she bringing the long time patients with them may not be that plausible due to the non-competition clause in the contract, but this clause seems only to apply to the 3 executive directors (see below extract from 2016 Annual Report).


Also, even with the enforcement of the non-competition clause, there will nevertheless be a substantial drop in the earnings once one of the major revenue generating doctors leave.

Currently, there are 5 major shareholders in this company: All doctors operating within SOG. Dr. Joyce Lim joined the group due to the acquisition of JL Group in 2016.


I am unable to find Dr. Joyce Lim Teng Ee’s age. But I reckon she is around mid-60s. Dr. Joyce Lim graduated from the Medical Faculty, the University of Malaya in 1978 (read here)

The contribution by the JL Group (eg. the Dermatology segment) for the group in terms of revenue & operational profit is very significant (around 30% in FY 2016). See below.



FYI, SOG paid around S$28.2 mil to acquire JL Group. Of which S$26.1 mil is goodwill.

As stated on page 129 of the 2016 Annual Report, there appear to be term service agreements for the services of Dr. Joyce Lim and Dr. Choo:

“With the completion of the Sale and Purchase Agreement dated 31 December 2015, JLD shall provide the services through Dr. Joyce Lim Teng Ee to SOG DERM, to manage, carry on and maintain the business and medical practices for a term of eight (8) years (“Term”). Upon expiry of the Term, the services may be renewed for a further two (2) years on similar terms and conditions as may be agreed between SOG DERM and Dr. Joyce Lim Teng Ee.”

“The Company has entered into a service agreement with Dr. Choo Wan Ling, which deemed her employment to have commenced on 1 July 2013, and will continue for a term of five (5) years from the effective date of 1 January 2015 (“Term”). Upon the expiry of the Term, the employment may be renewed on such terms and conditions as
may be agreed between the Company and Dr. Choo Wan Ling.”

So assuming, just base on operational profit by JL Group to maintain at around $3 mil for 8 years – the total profit is only $24 mil. And that is not considering the total compensation allocated to Dr. Joyce. – after subtracting it, net income (from Dermatology) may be lower over the span of 8 years. Moreover, we are talking about operational profit, if we consider net profit, the final profit amount would be even lower.

The key is how much they can grow their Dermatology segment organically (to compensate for this ‘loss’)… and would the terms and conditions requested by Dr. Joyce and Dr. Choo be more expensive after their respective service agreements end. Dr. Joyce and Dr. Choo appear to be not bound by the non-competition clause as well. And that is assuming Dr. Joyce does not retire after 8 years… (which I think is likely).

A sudden withdrawal of the service of Dr. Joyce would be disastrous to SOG’s cash flow – if it did not improve much after 8 years.

Ok, this ‘loss’ is debatable as there should be value created due to synergy created among the various clinics and segments. Eg. the patients with skin problem can be referred from the clinics in the O&G segment to the clinics in the dermatology segment, and patients with cancer-related or pregnancy related issues can be referred to the clinics in the O&G and Cancer segment clinics — vice versa. The monetary increment (hard figures) from this synergy is hard to extrapolate.

No 90% dividend payout – how?

To go back to the earlier part of my post pertaining to dividend payout. I reckon shareholders would not complain if there is an increase in earnings (due to the acquisitions) but a reduction in payout percentage provided that the overall dividend yield is maintained or increased (despite a dilution in shares). The thing, yield is dependent on dividend payout and share price. I doubt SOG management can manipulate share price.

Actually, I don’t understand why investors should be enticed by a 90% dividend payout – technically if you ask me, an investor looking for good passive income should aim for low dividend payout and high dividend yield. It ensures that the company is sustainable financially while at the same time reward the shareholders.

So back to the case of the acquisition of JL Group on 1 January 2016. The calculations below show that the group could have reduced the dividend payout ratio, while maintaining the same dividend payout (yield might have dropped as stock price have increased between 2015 to 2016):

  • 20,401,501 shares issued to Dr. Joyce Lim in February 2016 (Share capital increased from 218,000,000 to 238,401,501 in FY 2016). Basically, increase no. of shares (dilution).
  • S$2.9 million operational profit from Dermatology segment in FY 2016 (due to JL Group). Profit after tax increased from S$5,341,325 to S$8,803,678 in FY 2016 (ok, the increase in profit is not just because of the JL Group acquisition – but well – just for simplicity sake we assume that … they attributed the bulk of it).
  1. Estimated EPS per share in FY 2015 = S$0.0245 eg. S$5,341,325/218,000,000  (Base on 90% payout, dividend per share = S$0.022)
  2. Estimated EPS per share in FY 2016 = S$0.0369 eg. S$8,803,678/238,401,501 (To achieve dividend per share of S$0.022, payout percentage just need to be 59.5%)

A noteworthy point is that the gearing for SOG has increased in FY 2016.


So instead of lowering the payout ratio, SOG has opted to increase debt for pay for the acquisitions (which basically answer my earlier question on where the rest of the money needed for JL Group acquisition coming from).

In the short term, given the low-interest rate environment, it might be better to utilise debts to fund acquisitions. This would also avoid the unpleasant queries from the new minority shareholders. However, for the long term strategy (if interest rates do rise significantly) – the growth can be funded by earnings and share capital.

In the short term, the strategy to increase earnings while lowering payout ratio is a good one. I mention short term because the service agreements with the new doctors are not binding forever… (this reminds me of the nitro turbo charge to the car engines in the Fast n Furious movies…. fast but short). It gives the group a sudden boost in earnings (at least on paper) —- but the run-up might be short term if there is no subsequent injection of new blood organically.

And oh yeah, they do run the risk of having the occasional uncle raising his hand and asking during the annual AGM, to ask management to please raise dividend payout if yield did not increase (but decrease) over the long term. :p

Actually, in absolute terms, the shareholders get the same dividend payout, but when measured against the share price which has appreciated, the yield dropped (from 2015 to 2016)…. so sometimes, I wonder if some shareholders are aligned in growing the company. The fact is that SOG packaged itself as a growing company which at the same time, also announced such high dividend payout – to me is somewhat counterintuitive.

raised hand 300x300_2.jpg

Management Structure

The 5 major shareholders/doctors collectively own around 72.85% of the company. Dr. Heng (Executive Chairman) is the biggest shareholder of them all (at 29.44%).

Incidentally, her salary is also significantly higher than the others. A $1 mil salary for a company that has a $8.8 million net profit from a group of 10 doctors for FY 2016. And that is just the fixed salary – what about the tax-free dividend payout from her share holdings?


Although Dr. Heng is the major shareholder, the percentage of her share in the company (at 29.44%) pales in comparison to her peers in Raffles Medical Group (Executive Chairman Dr. Loo Choon Yong‘s total interest is 51.34%) and TalkMed (Executive Director and Chief Executive Officer Dr. Ang Peng Tiam & his spouse’s total interest is 65.35%).

By the way, I can’t find the exact amount of RMG Dr. Loo and TalkMed Dr. Ang total remunerations – just that it is above $500k.

Also, the management structure of SOG is different as compared to TalkMed, in the sense that the CEO of SOG – Dr. Ng Koon Keng (he was formerly CEO of Asiamedic Limited) is not a medical director.. and his total interest in the company is only 1.35%.

It is hard to gauge the ability of Dr. Ng base on what I have read about his background:

  1. Chief Executive Officer of AsiaMedic Ltd. until September 7, 2010.
  2. In 2004, he started A-Vic Enterprises Pte. Ltd., a media company that produced a lifestyle magazine designed for the medical profession in Singapore.
  3. At the end of 2008, he placed the publication on hold when he accepted an offer to become Chief Executive Officer of Surgeons International Holdings Pte. Ltd. During this period, he also served as Medical Advisor to Red Carpet Medical, a premier medical tourism business of Red Carpet Edition Pte. Ltd., and as a director of the Orchard Surgery Center Pte. Ltd.
  4. He became a partner in a successful GP practice servicing the eastern part of Singapore in 1988.
  5. In 1997, Dr. Ng joined the financial industry and worked for two (2) leading institutions before returning to medicine in 1998.

He has experience in the financial sector, medical sector, media sector… worked as a GP, CEO, Medical advisor etc… Still, does he have a track record of being a CEO that brought success to a company? I did glance at AsiaMedic financial fundaments, it does not strike me as a fast growing company with a great balance sheet.

This may be more evident in the case of Singapore Medical Group, whereby the ‘poster-boy”, CEO Beng Teck Liang seems to be credited for turning the company’s fortune around (back in the black).

Nevertheless, it is good that the star doctors in this company (who are also the major revenue generators) have major stakes in the company. Their interest in that sense might align with the interest of the minority shareholders. If not for anything else, they get compensated as well for their contribution. Although no one really is a very ‘majority’ holder.

Also running a clinic is different from running a listed company. A star doctor with a successful practice does not automatically mean he/she will also be a good CEO.

I reckon the doctors would like the company to continue growing after they retire — and to continue to receive dividend income from their share holdings (or capital from sale from their shares). But they have to grow the company fast (esp. organically).


In 2016, they have recruited two young Specialist Medical Practioners:
• Dr. Lim Siew Kuan (Age: 38)
• Dr. Hong Sze Ching (Age: 36)

Reaching beyond

In gist, for any investor, Singapore O&G is a long term play. The strategy laid out by the management take years to develop and come to fruition. I believe that SOG is going in the right direction, taking calculated risks and bringing synergy among related practices…. however, investors need to be really patient (and not just focus on the high dividend payout).

On a side note, I was watching the Berkshire Hathaway AGM video recently. At one point during the AGM, the question of succession and compensation to the successor taking over from Warren and Charlie was raised.

Warren mentioned philosophically about finding the individual who is already rich. Someone who is good at investing and passionate about it. His pay might never be able to compensate for the value of his service, but then again incremental increase in his net worth meant little to him (well – that is how I interpret it :p).  For instance, for that person $5 million, $10 million or $100 million is already more than he (and his family) will ever need… to ‘work’ for another $100 million isn’t that necessary. What motivates him isn’t financial rewards.

I guess for the mass majority of us who has not reached that level financially (well, no hard figures can define that — it really depends on your lifestyle and how much you need and want and what is the cash flow that can sustain it)…many of us would not be able to comprehend that. Like why Warren chooses to donate his shares to charity etc… Why work for less or nothing?…. But such individuals do exist and they do so for a higher calling.

If this is a Cashflow board game (the one by Robert T Kiyosaki), this person would have left the rat race a looooonnnnnggg time ago.

So why list a company you ask… why take the risk when they already had it all? Only the very few will comprehend. It is like asking Elon Musk – why set up Space X, Tesla, SolarCity, when he is already a billionaire. He could just ride off into the sunset with his wealth very early on.

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