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 The posts in Value Buddies about SOG are pretty outdated (most are dated around 2015 – around the period during SOG’s IPO).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 subscribing 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 are 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… and 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 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.

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).

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:

  • 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 (Base on 90% payout, dividend per share = S$0.022)
  2. Estimated EPS per share in FY 2016 = S$0.0369 (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 need 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

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.


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.

Posted in Healthcare Stocks | Leave a comment

That feeling…


You know the feeling when you have the money but nothing good to buy? I don’t know – I have been waiting at the sideline and occasionally seeing fellow bloggers purchasing stocks. But that feeling to buy just isn’t there.


I was with my wife at a recent property launch by a developer. I guess the developer was hoping for better buying sentiments due to the recent government targeted tweaks to property market measures and a new stamp duty.

My wife was impressed with the property.

One note-worthy point – there have been a number of property launches around that area over the recent years, and this project stands out because there are no shoe box or 1 room units. The smallest units are 2 bedroom units. It was stated that the target group was people buying for own stay or families rather than investors. I reckon developers have come to acknowledged that the savvy property investors are out of their reach and beginning to target people buying for their own stay.

There are many things to like about the property – great location, near amenities around it, near the city, good schools nearby, near our in-laws, great for renting out to expats, etc…. But for a 3BR + study unit, it is not cheap….

My wife just fear that we would regret in the future if we did not buy.

But I just looked at my wife after the viewing and said:

“Dear, there will be many middle-income couples like us who think they can afford it, and who will probably buy a unit. Yes, with our income now, we can afford it. The bank representatives would say no issue. But with interest rate increasing – to maybe 2+ to 3+ percent, that would be difficult for us to finance.

And won’t that be a better time to buy? When these people are thinking of dumping their properties?”

Yes, even if interest rate increase by another 1% (with current rates at approx. 1.38% to 1.48%), it is still possible for us to service. However, banks don’t use the prevailing interest rate to calculate TDSR, they use a “stress test” interest rate (set by MAS), which tests the ability of borrowers to handle any sudden rise in interest rates.

FYI, MAS has standardized the stress test to the following levels:

  • For residential properties, all banks must calculate your TDSR on a stress test rate of 3.5%.

Would I be comfortable paying the loan at 3.5%? I think not…. Leverage magnifies the gain and pain.

I think one must really know oneself really well. I reckon investing (with real money) in the stock market really make you acutely aware of yourself (and your own weakness). You had to be – after staring at a portfolio full of red. muahahaha

“Bulls make money, bears make money, pigs get slaughtered”

Will it reach there? Check out the chart below.


Most banks in Singapore offer SIBOR-based home loan packages. It is considered the most widely used reference rate for home loan packages in Singapore and the most popular amongst consumers.

Currently, the 3 mth Sibor rate is 0.99875%. Looking at the above chart, if you ask me, over the span for 1987 till now, this rate is still ultra low. The rate after the GFC in 2008-2009 in relation to the previous years (with the wild swings from 1987 onwards) seems artificially low….. The previous years’ chart looks like the typical stock chart (more realistic) :p

Nevertheless, the above is just the Sibor rate, not the variable interest rate or fixed interest rates (which will be higher).  So back to the question… will it get to 3.5%? My answer will probably be – why not?

The real puzzle is how fast. The fact is, people like you and me have totally no control over it.

Home owners should prepare for higher mortgage rates: Analysts (read here)

Banks drop some fixed-rate home loans amid interest rate uncertainty (read here)

The below chart is from this website. According to the site, the below set of home mortgage loan offerings represents the best deals available for people in Singapore given that most loan rates move in tandem with reference rates like SIBOR and SOR.

Well, it may be outdated (dated Jan 2017) and the 3mth Sibor rate has increased from 0.96893% (Jan 2017) to 0.99875% (in May 2017)


I just don’t see any blood on the street yet.


Yes, Sentosa Cove is becoming like a ghost town and many of the sellers are losing money (surprisingly some of the buyers forking out the millions to buy, have HDB addresses)… but that blood is not rampant everywhere yet.

Why are Sentosa Cove prices falling like crazy? (read here)

How will interest rate affect the price of the property? Not sure too… after all property price is dependent on a number of factors eg. rental rates, population growth, government policies, etc… But in general, the price (according to the price index chart below), still look relatively high. Odds not in buyers’ favor I reckon.



Fear-based selling

I find this recent post by BULLy the BEAR intriguing if not timely – considering what I am currently thinking about.

To quote: “I just want readers to be aware of such emotional battles. When people are making huge money and you have a lot of cash rotting in the bank, are you able to withstand the pressure and all the fear based selling and NOT commit to mistakes?”


And I also like this talk by Lauren Templeton (see below) – the video was published on Mar 6, 2017:

Lauren Templeton: “Investing the Templeton Way” | Talks at Google (click here)

In it, Lauren talks about The Marshmallow test. The child is given the choice to either eat the marshmallow now or he can wait and not eat. If he succeeds in not eating it, he will be rewarded with a second marshmallow.


Basically, it is about delay gratification. People have trouble controlling themselves. It is difficult dealing with all these stress hormones (emotions) in times of panic (eg. very difficult to buy at the bottom of the market).

Interestingly, some of the bigger companies in the US (including Berkshire Hathaway) are sitting on an awfully big pile of cash.

Warren Buffett reveals what’s holding him back from putting Berkshire’s $90 billion in cash to work (read here)

Apple’s cash hoard swells to record $256.8 billion (read here)

US corporate giants hoarding more than a trillion dollars (read here)


As for me, despite the feeling mentioned at the start of the post, I think now is a good time to ‘tidy up’ my stock portfolio. To sell the stocks whose fundamentals and growth stories have deteriorated. I don’t think I will sell all my stocks… I still any overall ‘collector’ of stocks for the long haul.

Posted in Uncategorized | Leave a comment

My experience with oBike

The HDB apartment which my family is staying at is just next to the MRT station. In recent months, it is not uncommon so see a number of bikes from bike sharing companies (eg. ofo, oBike and Mobike) parked nearby.

Yesterday (Saturday), while running the normal errands, I thought I might as well try out one of these bikes.

Bike-sharing in Singapore: Mobike, oBike and ofo put to the test (read here)


  • 1st errand: To buy lunch and spend time cycling with my son. 

Saturday (late morning): My wife was busy taking care of our daughter, and my son was bored at home. So basically to ‘kill 2 birds with one stone’, I thought that it would be a good idea to spend time with my son cycling around while buying back lunch for the family. My son has his own bicycle.

As this is the first time I tried these bikes, I am not really familiar with their apps. I downloaded all 3 apps (from ofo, oBike, and Mobike).

Basically oBike and Mobike asked for a SGD 49 deposit to use the bicycles. The deposit, by the way, is refundable.

I find oBike and Mobike’s app platform systems more user-friendly as I can easily locate their bicycles using their app platforms. I can’t do so with ofo.

Nevertheless, I reckon price-wise, ofo is the best (since it is free for now). I reckon this (being free) is also the reason why it is harder to find ofo bicycles.

So selfish! More people misusing ofo bicycles at Yishun and Punggol blocks (read here)


  1. ofo: The pricing for ofo will be $0.50 per trip, but the rides are free for now.
  2. oBike: At $0.50 per 15 minutes, oBike’s pricing is fairly competitive. Promotions are available – referring a friend gives both of you a $3 ride coupon.
  3. Mobike charges $1 for every 30 minutes of use. Each time you top up, you get a number of free rides (as long as the ride is under 30 minutes), encouraging you to continue biking.

I did not manage to locate any ofo bicycles near the MRT station and hence was basically left to choose a bicycle from oBike or Mobike. I ended up choosing a bicycle from oBike.

How to use oBike? Check out this link.


Logging into the app was fairly easy, and I was able to quickly locate a bicycle to use.

obike 1.jpg

The bicycle (from oBike) I used has a number of flaws:

  • The height of the seat cannot be adjusted- the connection was jammed. It is supposed to be adjustable. With the seat at the lowered level, it was harder for me to peddle (esp. up a slope).
  • The locking mechanism is faulty: I had to scan the QR code (or key in the bicycle number) and manually try to unlock the lock (located at the top of the rear wheel) several times before successfully unlocking it.
  • Not all oBike comes with a basket in front (and lighting). I prefer those with baskets as I can easily put my bags or food packages in front.

Well, I reckon this bicycle was faulty due to misuse, as the next oBike I used did not have these problems. Nevertheless, for this second bicycle I used, the front handles are not really aligned with the front wheel. I had to hold down the front wheel between a railing and twist the handles into place.

So back to errand: I did cycle with my son to a nearby hawker center and bought lunch for the family. I had to slow down several times and wait for him and made sure that he crossed the roads safely.

The bicycle was quite heavy and as there is only a single gear, it was not easy going up a slope. Nevertheless, it was fun cycling with him. We both get to do some ‘work-out’ too (instead of just staying at home watching TV).

The good thing about the app is that after each trip (from the time you unlock the bike to locking up the bike), it would tell you the duration of each trip, the riding distance, the cost and the calories you burned.

For the half an hour trip (to and fro) with my son, I cycled 4 km ad burned 216 kCal. The trip cost me nothing, as there is a ‘free weekend’ promotion by oBike (no need to key in promo code as well).


  • 2nd errand: Riding to the swimming pool

I typically go for a swim during the weekends. My wife would sometimes complain that I spend far too much time for my swim (leaving her with the kids).

The public pool is quite a distance away and there is no direct bus from my place to the pool. I reckon it takes me around 15 mins to walk there. So to reduce the travel time, I decided to use the oBike again.

This time with the oBike, I was able to reduce the traveling time per trip to 7 mins. Total time traveling to and fro is 14 mins. Total distance traveled is 2.4km. Total calories burned is 112 kCal. Again it cost me nothing.

And the most important thing: Wifey not as unhappy when I got home – as I spent less time out :p



Parking was fairly easy. All I need to do is to find any public bicycle parking stands to park the bike – these are easily found in MRT stations, in HDB void decks, outside hawker centers etc….

Returning the bike was a matter of parking it at a designated public bike parking area and turning the bike lock on the back wheel to let the app know that the session is over.

oBike employs a credit system, where demerit points are given to users who break such rules. A bad credit score affects the cost of your ride.

Well, when I reached the HDB void deck (below where I was staying), I noticed 2 other oBikes parked there. Seems like it would be easy for me to access these bikes if I need to use them (parked nearer than I thought).


In summary:

Well, I think Bike-sharing is a good idea. Personally, for me, it makes running errands (to places near where I am staying) much easier and faster.

I don’t intend to purchase a bicycle for myself as there isn’t any place to store the bicycle at home. I don’t find hanging a bicycle on the wall nice either. In addition, putting a bicycle in the common corridor is unsightly and the bicycle could be stolen.

I do not mind trying the bicycles from these bike sharing companies again. The pricing isn’t that expensive as well.

It is a cheap and easy way to go to nearby places (while burning calories).

>> Faster than walking through the last miles from HDB to MRT
>> Cheaper than taking a cab
>> Less time-consuming than waiting for a bus
>> Healthy and environmental-friendly


Posted in Bike Sharing | 1 Comment

TalkMed Group Ltd vs Singapore O&G Ltd


I always like healthcare stocks. I do personally own some shares of Riverstone Holdings. The company is a natural rubber and nitrile (synthetic rubber) glove manufacturer specializing in clean-room and healthcare gloves.

I have also written some posts about other listed Healthcare companies.

  1. Random thoughts on RHT Health Trust (read here)
  2. Bloomage Biotechnology Corp (963 HK) – Quick Study (read here)
  3. Revisit Riverstone Intrinsic Value (read here)
  4. Real Nutriceutical Group Ltd (HK:2010) (Time to buy?) (read here)
  5. Health Management International Ltd (Uncertainty ahead) (read here)
  6. Riverstone Holdings Limited (The one that got away) (read here)
  7. May Day and Q&M Dental Group (read here)

I am sure people who are avid readers of the Motley Fools online articles will be keenly aware of Raffles Medical (read here).

A close second would be death-care stocks. After all, we all have to die someday. I used to own Nirvana Asia LTd shares before the company was delisted (from the Hong Kong Stock market). Currently, I own shares of Fu Shou Yuan International Group Ltd.

  • Fu Shou Yuan International Group Limited (read here)
  • Grim Reaper Stocks (read here)

Personally, in recent times, I’ve stumbled across quite a number of articles about healthcare stocks listed in Singapore, in particular, some of the newer (and smaller market capitalized) stocks.

In general, given the aging population trend, increasing government subsidies in healthcare in this part of the world, and the rising middle class in many Asian cities, it is not surprising that many investors have a penchant for healthcare stocks listed here.

As a sector, in comparison to other sectors, their average PE appears rather high.

  • Singapore Healthcare Stocks Kick Off 2017 on Strong Note (read here)

I felt that I have not reviewed this sector in sufficient details, especially given the number of newly listed healthcare stocks. Many of them are healthcare services providers eg. doctors operating in clinics or hospitals.

Firstly, yes, healthcare sector by definition is a very defensive sector (in good or bad economic times, people do fall ill and need to see doctors. And with rising age, we need heath-care more).

I do not work in the healthcare sector, but I always felt that being a doctor is a very respectable profession. I am not sure about how other professions function – but in comparison to my own profession in the construction industry, I felt that people do value the advice of doctors more. After all, it is your health (or life) you are talking about here.

Well, I may be wrong, but (from the way I see it) in other professions eg. designers, engineers, architects, lawyers, accountants, etc….the clients generally engage managers in auditing their work or set schedules or deadlines for them to comply. On the other hand, there is a certain amount of autonomy in practicing as a doctor. Well, as a ‘client’, if you don’t agree with the advice from this doctor, you could always go seek another doctor’s consultation. But I doubt you can ‘manage’ any doctor.

In addition, doctors have the ‘divine power’ to issue medical certificates so that we can be excused from work.

However, from the point of view of an investor, there is also a certain risk in choosing a company that is highly dependent on the competency of a few highly qualified (and highly paid) professionals. People, unlike machines, do ‘vote’ with their feet if they dislike the management or have better offers elsewhere. The effect of a ‘superstar’ doctor leaving the organization would be keenly felt (by the drop in revenue). Hence, I always like companies which generally employ low-skilled workers whom can be easily replaced (and has less overhead cost, and easy to train). So yes, a healthcare provider company has this ‘wild card’ or variable component that makes it kind of unpredictable.

Put it in another way, I like stocks such as Colex, 800 Super, ISOTeam, Sheng Siong, Old Chang Kee, Vicom, Riverstone…. In a very simplistic way, I see their business as not needing highly paid or expensively trained (with tertiary education) professionals. In comparison, these companies can easily source for a replacement for any employee resigning.

  • Colex / 800 Super: Waste collection business  —- workers (with basic education) & foreign workers.
  • ISOTeam: Building & Estate maintenance — contractors & workers (with basic education).
  • Sheng Shiong: Supermarket chain —- cashiers, packers, storemen, drivers (all with basic education).
  • Old Chang Kee: Food on the go — aunties/retirees.
  • Vicom: Vehicle maintenance/material testing — mechanics, technicians (with basic education).
  • Riverstone: Gloves manufacturer – workers / foreign workers (with basic education).



From another angle – a company that provides healthcare service is different from a company that manufactures and sells healthcare products (be it gloves, mask, instruments, supplements, medicine, etc…).

I find products more predictable. Yes, there are the occasional foreign worker levies (which has impacted many of the glove manufacturers in Malaysia), material cost fluctuations, forex risks… etc.. but I find people more unpredictable.

  • New foreign worker levy rule weighs on manufacturers (read here)

So with so many healthcare stocks listed in our small Singapore Stock Market — one can be spoilt for choice. Nevertheless, I do find current valuations on the expensive side– but I always felt it is only a matter of time when valuations become attractive again.


Among these, I find many similarities between TalkMed Group and Singapore O&G.


TalkMed Group Ltd (SGX: 5G3) is a relatively new company in the Singapore stock market. It has a market capitalization of approx. S$1 billion and was listed only in January 2014.

TalkMed is essentially a group of doctors who provide tertiary healthcare services in the field of medical oncology, stem cell transplant, and palliative care to oncology patients. Oncology is a branch of medicine that deals with cancer. The company’s services are provided through the Parkway Cancer Centre.

Singapore O&G Ltd (SGX: 41X) is also a relatively tiny new company in the Singapore stock market. It has a market capitalization of approx. S$330 million and was listed only in June 2015.

Singapore O&G is a healthcare services provider that specialize in women’s wellness. The O&G in its name is an abbreviation of “obstetrics and gynaecology.”

The stock prices of these 2 companies are doing well (ever since they were listed), albeit for only short periods.



Both these companies operate primarily in Singapore.

Nevertheless, TalkMed entered Vietnam in 2014. By 2015, it had made S$0.33 million in revenue from the country, which amounts to merely 0.5% of total revenue during the year.

TalkMed also holds a 30% stake in Hong Kong Integrated Oncology Centre Holdings Limited (“HKH”). HKH is the controlling shareholder and operator of an integrated oncology centre known as Hong Kong Integrated Oncology Centre Limited (“HKIOC”) which commenced operations in May 2015. HKIOC now provides a comprehensive range of treatment (including surgery, radiotherapy, and medication), diagnostic imaging and endoscopy services in Hong Kong.

Foreign patients account for the majority (more than 60%) of TalkMed’s patient-load in the past few years.

TalkMed currently provides medical oncology services and palliative care services with thirteen doctors at nine clinics in Gleneagles Hospital Singapore, Mount Elizabeth Hospital Singapore, Mount Elizabeth Medical Centre, Mount Elizabeth Novena Specialist Centre Singapore and Parkway East Hospital, which are hospitals operated by PHS.


In the case of Singapore O&G: As at 31 December 2016, the Group had a total of ten Specialist Medical Practitioners:

  • 6 O&G Specialists;
  • 3 Cancer Specialists: One Gynae-Oncologist and two Breast and General Surgeons;
  • 1 Dermatologist.

It appears that majority of Singapore O&G’s revenue come from local patients. To quote from their 2016 Annual report: “We continue to experience encouraging support from patients residing in Singapore and the Company is looking at alternatives to increase patient traffic from our neighboring countries.”


In addition, the majority (60.9%) of Singapore O&G revenue is contributed by the Obstetrics & Gynaecology segments.


Macro Trend

Before moving onto the financials….given the fact that the trend in Singapore is that of an aging society with falling birth rate. In that sense, Singapore O&G’s focus on Obstetrics & Gynaecology in Singapore seems somewhat lackluster in terms of the future growth prospect when compared to TalkMed. After all, our risk of getting cancer only increases with age.

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


Management from the ground

However, that is just the macro trend. When I compare the beginning paragraphs of the 2016 Annual Reports of Singapore O&G and TalkMed… I can see that Singapore O&G appears to be better managed.

“SOG’s financial performance exceeded internal forecasts and more importantly, we are able to meet the investment community’s expectations…. we achieved a 74.7% increase in gross revenue of S$28.7 million and a 64.8% increase in net profit of S$8.8 million over the previous year. Our net profit margin remains healthy at 30.7%.”

In comparison, this is what I read in TalkMed’s Annual Report (emphasis mine):

“For FY2016, our revenue improved by some S$3.20 million or 4.9% to S$68.91 million. However, total operating expenses saw a more than proportionate increase of 15.8%, or some S$2.82 million to S$20.70 million. Employee benefits for FY2016 increased mainly due to an increase in staff salary, higher bonuses paid out and additional staff recruited during the year to support growing business activities. Operating lease expenses increased…… Other operating expenses increased mainly due to the full-year effect of overhead expenses incurred by Stem Med which commenced operations in July 2015. In addition, for FY2016, the Group incurred a share of loss of its associated company, Hong Kong Integrated Oncology Centre Holdings Limited (“HKH”), of some S$3.63 million. As a result of the above factors, the Group’s FY2016 profit attributable to shareholders was relatively unchanged at S$37.39 million.


No doubt Oncology appears to be a more lucrative field as compared to Obstetrics & Gynaecology eg. $37.39 million profit from a group of 13 doctors (TalkMed) vs $8.8 million profit from a group of 1o doctors. -> The difference is obvious.

However, it seems like overhead expenses (in the case of TalkMed) are also equally expensive.


Although not all great investors place a high emphasis on management (a good management to many, is not an economic moat), but there are cases whereby bad management can really make a very negative difference.


And perhaps for healthcare providers, a strong leadership would have a positive influence on their staffs… these are people they are dealing with. The structure of the company (esp. for a small company) by itself seems to be highly dependent on the leadership quality… I doubt any ‘fool’ can confidently manage a bunch of ‘superstar’ doctors. Again, this (emphasis on management) adds another layer of complexity in evaluating the company.

  • Healthway: A tale of how risky loans made a firm sick (read here)
  • Healthway Medical Corporation widens Q4 loss on allowance for doubtful loan receivables (read here)


Reading Singapore O&G Annual Report, I can sense the emphasis by the management in looking for doctors who share their passion in helping patients.



Historical financial performance

Before we study in details their financials, let’s take a peek at the trends of their historical financial data.


Year 2014 2015 2016 2017
Total Dividend Amount $0.03270 $0.06950 $0.04585 $0.02283



Base on the above data, my impression is that although TalkMed’s revenue has been trending up since 2010, this upward trend is not reflected in their resultant profit. This failure to translate increasing revenue to increasing profit is not limited to just the year 2016, and seems like expansion overseas does come with the unforeseen risks.

Despite the high profitability of the Oncology practice, this would not matter much if this does not translate to profits for shareholders. Is the company investor friendly?

This is in contrast to Singapore O&G, whereby increasing revenue translates to increasing profit. In fact, the upward trend in profit is more pronounced in recent years.

Consequently, dividend payout in the case of Singapore O&G has been steadily increasingly (in step with the profit increase). I do not see this, in the case of TalkMed.


Looking at the ROE, ROA and ROIC (see below), for both companies there is an overall downward trend.

However, I can only obtain 3 years data for Singapore O&G. Basically, there isn’t much historical data for both companies. Nevertheless, the ROE, ROA and ROIC values are high in the case for TalkMed. Well Singapore O&G’s ROE, ROA and ROIC values aren’t exactly low either.



Singapore O&G’s Earning per Share seems to be trending up. However, there are really insufficient data (only a few years) to make any solid conclusion.





See below data from Yahoo Finance dated 21 April 2017.

Comparison Table.jpg


  1. The Trailing P/E, Price to Book and EV/EBITDA all seem to suggest that the stock price is on the high side (over-priced). Exception: TalkMed’s EV/EBITDA is less than 10. (As a rule of thumb, any EV/EBITDA below 10 is the sign of a good value).

Profitability and Management Effectiveness

  1. These values are on the high side which is good. Singapore O&G’s ROA is just average.

Balance Sheet

  1. With negligible debt, there is not much to complain about.
  2. However, TalkMed’s current ratio is rather 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).

In summary, I can’t really see any major flaws in the fundamentals except that the valuations are rather high. Both have good fundamentals.

If one is to compare the two, I would say TalkMed has stronger fundamentals, as its profitability, management effectiveness, and the balance sheet is much stronger. But that is only base on the current fundamentals.


Trailing PEG and Intrinsic Value

Let’s do a quick study on the respective current share price of TalkMed (S$ 0.89) and Singapore O&G (S$ 1.39) – via their Trailing PEG and Intrinsic Values.

  • Trailing PEG


The trailing PEG values of both stocks are more than 1, which is not good.

  • Intrinsic Value

Intrinsic Value calculator_TalkMed.jpg

The actual EPS value of TalkMed for 2012 is $5,793.00. Which I find not feasible to use in the intrinsic value calculation. In addition, there are no EPS data for the year 2007 to 2011, since the company was newly listed.

Well, the assumption is that from 2007 o 2012, the EPS is $0.06 … yes, the intrinsic value is not really accurate given the lack of historical data.

Nevertheless, the calculated intrinsic value of $0.87 is lower than TalkMed’s current stock price of $0.89, hence there is no margin of safety. However it is close.


Intrinsic Value calculator_SOG.jpg

For Singapore O&G, there are no EPS data for the year 2007 to 2013, since the company was newly listed.

Well, the assumption is that from 2007 o 2013, the EPS is $0.03 … yes, the intrinsic value is not really accurate given the lack of historical data.

Nevertheless, the calculated intrinsic value of $0.41 is lower than Singapore O&G’s current stock price of $1.39, hence there is no margin of safety.


In Summary

Well, it is obvious that the share prices of these two companies are expensive (with little margin of safety).

However, from what I have read, given the choice, my preference would be with Singapore O&G. Hopefully one day, its share price would drop low enough such that there is a comfortable margin of safety…

This stock would be on my radar. Nevertheless, think I should read up on more healthcare stocks.

Posted in Healthcare Stocks | 1 Comment

The effects of having more cash on hand


For a very long time: the cash in my bank account did not go beyond 15% of my net worth.

From another angle, as I get older (and worked more years), although my salary and savings did increase, the absolute amount of savings did not rise much in my bank account. I never have much liquid cash.

Even in my wallet, I seldom have more than $100 bucks in cash (the amount was more recently, as I need to use cash for cab fares for work-related travel). I try to use cash to pay for things and would try to limit (and take note of) the amount I withdraw from the ATM each time.

Typically, I would invest most of the money shortly after receiving my monthly salary. I always felt that money left in the bank would lose its value over time due to inflation – hence the need to invest. I seldom give myself the ‘chance’ to spend the money I earned.

So in a way, I never felt rich (and I am still not rich)… my net worth is always fluctuating (due mainly to my stock holdings).

However, recently I have divested some of my shares (most are delisted) eg. converted from shares to cash (savings in the bank).

In percentage wise, currently, the liquid cash (savings in the bank) I have, stands at around 31% of my overall net worth (excluding the value of the property I am staying in).


However most importantly, in absolute amount, it is literally the largest sum I have in my bank account so far. Cash which I know, would not ‘fluctuate’ much, unlike the value of my stock portfolio.

I remember when I first started working, to me – $10K is a large sum of money. I remember once when I queued up behind a guy at the ATM machine and when it was my turn at the machine, I noticed that he has forgotten to take the receipt. I saw that he has more than $10K in his saving account – and I was like, “Wow….I wonder when I can have $10K in my bank account”. Well, back then I was a fresh graduate with a student loan.


I think having more cash on ‘hand’ have certain ‘psychological effects’ on me.


1) Firstly, I do not worry that much about my stock portfolio. Yes, I still have a significant amount tied up in shares, but in percentage wise, it is manageable and much lesser than I normally have.

I tend not to worry too much about a market correction or crash. And I see it as an opportunity. Bad news could be good news to me :p.

I do plan to purchase big when opportunities come knocking. The only downside is.. it can get really boring waiting (for the right price).

Nevertheless, I do intend to sell more shares in the near future to pump up my cash holdings.


2) I think there is always a certain amount of stress holding stocks. It is never really ever that ‘passive’ mentally.

You worry about the company fundamentals, their prospects, the management competency, new rivals / competitors, disruptions in the industry, erosion of their economic moats, cutting of their dividends, reduction in ROE / ROIC / ROA, deterioration of the balance sheets, private placement or shares (dilution), if management is overpaying themselves (or overpaying for share buybacks), etc….

That is partly why I read the news.

Now the stress level is lowered.


3) I still look for stocks to buy and read news about other companies. However, I am in no hurry to buy. There is no urgency so to speak. I can slowly put these company names in a list (together with my target price)… and wait…

I guess the other reason could be because the market valuations (in the US) are still high.

All of sudden, I can ‘afford’ to wait. 


4) I am more easy with my money (not necessarily a good thing).

I do indulge in the occasional tea or cafe latte, and spend a bit more on my lunch. I do not consider too much when I spend for my family needs. I do enjoy buying things that my kids need.

However, overall I am still pretty much tight fist about my spending (but less so). Yeah, still cheap stake. And with the tax season around the corner, I am still apprehensive about the amount of tax payable… haiz…

I think mentally it is worse when I have more in stocks and only like less than 5% in cash…. and my stock portfolio value kept dropping. During that time, I would try all means to cut down on my expenses — esp. pertaining to my meals.

Put it in another way, to spend $50 is a big deal when you only have $100 in your bank account. But proportionally, it is not that much a big deal, if the amount in the bank account is $100,000.

‘$3.17 is a bacon, egg and cheese biscuit. The market’s down this morning, so I think I’ll pass up the $3.17 and go for the $2.95.’ Warren Buffett


5) I spend more time with my family, watching shows (and more youtube video clips), tidy and clean the house, trying my hand on some online ventures (still not successful)…. or just sleeping more :p

quote-i-have-sporadic-ocd-cleaning-moments-around-the-house-but-then-i-get-lazy-and-i-m-cured-chris-hemsworth-12-95-44.jpg6) I start to wonder if bank representatives will call me and try to sell me some unit trusts or investment linked products….

In the past, when the cash value in my bank account crosses a certain threshold, the bank representatives will occasionally call up and ask me to sign up for some of their investment products…..

Thankfully, I have signed up for the “Do not call registry“… I guess it helps.

Posted in Portfolio | 1 Comment

Old Chang Kee


As stated in my earlier post, Old Chang Kee trailing dividend yield was at 3.45% on 12 March 2017. It isn’t a very high yield (esp. as compared to the business trusts and REITs). So you may be scratching your head, wondering why I put this in the ‘dividend’ stock list.

However, in an environment of rising increase rates, whereby the normal yield of stocks is hovering around 2% to 3%, a 3.45% trailing dividend yield is actually not too shabby. In 2016, its dividend yield was a good 6.9%. And that is not excluding the rise in the share price since 2009.

Over the past 8 years, since 2009 to 2016, Old Chang Kee has distributed an average annual dividend totaling around 31 cents per share (including Special Dividend Payout). The Group does not have a fixed dividend policy but has paid dividends every year since it was listed.





Base on the charts above, the payout and yield aren’t exactly trending in a linear straight line, but there is an overall upward trend nevertheless.

The recent TTM Payout Ratio is only 73.7%.

In addition, the company’s shares are up approx. 470% from 1 Jan 2009 to its closing price of $0.87last Friday (17 March 2017). In comparison, the capital gain returns of the SPDR STI ETF was approx. 80% for the same duration.


Old Chang Kee has been around since 1956, growing from a single stall outside Rex Cinema to 80 outlets as of the financial year ended 31 March 2016 (FY2016). Tt is a not a big listed company, with an enterprise value of only S$97.8M.

However, there are many merits from this small company, besides the above average dividend yield.

In terms of business model, it is one of the simplest one, I can find. Seriously, it is such a small and simple company:

  • Their signature curry puff is sold at their outlets together with over 30 other food products including fish balls, chicken nuggets, and chicken wings.
  • Most of their sales are on a takeaway basis and their outlets are located at strategic locations to reach out to a wide range of consumers.
  • The Dip ‘n’ Go retail outlet offers delicious food on the go, with a variety of dips to go with.
  • Bun Times retail outlets offer Hainanese inspired buns.
  • The “Curry Times”, “Take 5” and “Mushroom” dine-in retail outlets carry a range of local delights such as laksa, mee siam, nasi lemak, and curry chicken.


The business model as compared to most full-service F&B companies is less capital intensive. Although they have dine-in retail outlets, most of their sales are from a takeaway basis.

So yes, besides the normal low expenses of not having to hire highly skilled and paid staffs (most of them are above 45-year-old aunties), the company does not have to fork out a high rental for large areas (seating areas + kitchen).

2-in-1 concept stores improve efficiency (extract from this article)

The 2-in-1 concept combines an Old Chang Kee store with one of its sub-brands. Its first 2-in-1 concept store was launched in 2013, in Alexandra Retail Centre, with Old Chang Kee sharing the premise with Curry Times Tingkat. The 2-in-1 concept optimizes manpower and resources (store space and kitchen area), especially when both OCK and Curry Times have different peak hours.


To me, it is one of the few stocks which have both yield and strong fundamentals. Growth has faltered in recent years but there are plans for future growth.



The Retun on Assets, Return on Equity and Return on Invested Capital all have been trending downwards over the years. However, nevertheless, the recent TTM ROE and TTM ROIC are 15.26% and 12.58% respectively. Still reasonably good.


In the recent 3rd quarter results repor, the following was stated:

  • The Group’s revenue showed an increase of approximately S$1.4 million or 7.5%. (3Q2017 vs 3Q2016)
  • The Group’s profit before tax increased from approximately S$1.5 million in 3Q2016 to approximately S$1.7 million in 3Q2017, an increase of approximately S$158,000 or 10.5%.
  • The Group expects operating lease expenses (rental) and labour and raw material costs to remain high in the next reporting period and the next 12 months and believes that the labour market will continue to remain tight. Retail conditions will continue to be challenging amidst mall revamps and with new entrants in the food and beverage market.
  • The Group believes that its new factory in Singapore when completed and fully operational in the later part of 2017, together with its Malaysia factory, will provide the platform for the Group to grow its business both locally and regionally while keeping the cost under control.

With regards to the last point, this article by Phillip Securities gives a more detailed write-up on the expansion potential:

“The Group acquired two factory facilities, in Iskandar Malaysia and 4 Woodlands Terrace Singapore (“New Factory”, adjacent to its original factory facility at 2 Woodlands Terrace), in Aug 2011 and Aug 2012, respectively. The construction works for both new factory facilities have been fully completed during FY16 and have commenced operations.

Currently, the Group is undertaking reconstruction works for its original factory facility at 2 Woodlands Terrace, and is expected to complete in June 2017 (1QFY18). When the reconstruction is completed, it will be fully integrated with the adjacent New Factory.

The integrated factory facility at 2 and 4 Woodlands Terrace will feature modern technology and machinery that will further improve its food consistency, labour efficiencies and space productivity. The integrated factory is expected to increase capacity by 60%, from 50,000 puffs per day to 80,000 puffs a day. The additional production space, which almost doubled, would also provide additional capacity for its product innovations.”




  • Total cash is more than Total debt, which is great. (Net cash approx. S$6.58 M).
  • However, the current ratio at 1.35 is low. (Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses), while total debt/equity ratio is high at 24.1.

Not perfect, but it is not very weak.




The Trailing P/E, Price to Book and EV/EBITDA all seem to suggest that the stock price is on the high side (over-priced).(As a rule of thumb, any EV/EBITDA below 10 is the sign of a good value).


The current stock price of Old Chang Kee is S$ 0.845 (on 24 March 17).

Trailing PEG and Intrinsic Value

Let’s do a quick study on the current share price of S$ 0.845 – via Trailing PEG and Intrinsic Value.

1) Trailing PEG

P/E: 20.61

Dividend Yield (%): 3.55 (from POEMS)

5 years EPS compound growth rate: 0 (from

The trailing PEG will be 20.61/(3.55+0) = 5.81. Which is not good (above 1).

2) Intrinsic Value

Intrinsic Value calculator_Old Chang Kee.jpg

Hence the intrinsic value of Old Chang Kee is $ 0.46.

Given the current stock price of Old Chang Kee on 24 March 2017 is at SGD 0.845, there is NO margin of safety base on the estimated intrinsic value.



In Summary

In gist, shall keep a look out for this stock and hope to pick up some when its stock prices are favorable.

Posted in Old Chang Kee, Uncategorized | Leave a comment

Loading up on my War Chest

I have previously done a post about ‘spring cleaning’ my stock portfolio on 5 March 2017 (read here). With equity valuations looking a bit rich, I reckon it would be good to raise the percentage of my cash holdings.


On 11 Feb 2017, I did a short post on an update to my portfolio. The percentage of my Savings & SRS (cash) then was at 13%. Earlier on 4 Sept 2016, the percentage of Savings then was only at 8% (read here).

I recently sold my Super Group shares (at $1.295 a share), just a couple of days prior to receiving the package pertaining to the delisting of Super Group (the realized profit at approx. 16% of the amount invested, excluding dividends received). Although the selling price was lower than the $1.30 delisting price, it was not a lot of difference.

The stock price of Super Group has been hovering at around $1.30 for quite some time (regardless of overall market performance).

I first started buying Super Group shares in June 2014- only selling once in April 2015 (small amount). I have been all the while accumulating. So in total, it has been less than 3 years. 16% for 3 years isn’t a lot – but then Super Group is one of my biggest holdings, and I am glad that it turned profitable at the last ‘minute’ due to the privatization offer.

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
Warren Buffett

Well. time to say goodbye I reckon (even if I don’t sell the shares, the company will probably be delisted soon).

Anyway, now my cash holding has increased significantly – which is at 31%. It hasn’t been at this percentage for a long time.

This percentage is even greater than the percentage of my stock holdings (27%). I would say, the risk exposure to any market corrections or crash is at around 29% of my net worth (Stocks + Unit Trust), and maybe some of the Insurance Cash value. The rest will probably not be affected.


Having said that, the passive income from stock dividends will be super low this year (2017).

For the time being, I probably won’t sell any more stocks. I am pretty happy with most of my stock holdings for now. These are stocks that I can sleep soundly with, and ‘forget’.

Well, for the stock that I don’t really like (eg. Golden Agri) – the unrealised loss is still a lot. Nevertheless, I do believe that in the long term, as a cyclical stock, CPO prices will rise, and hence lifting up the stock price.



Posted in Portfolio, Uncategorized | 2 Comments

Random thoughts on RHT Health Trust

I previously wrote a post whereby I included a short list of my so-called ‘dividend stocks’ (see below). I am sure there are many other high yield stocks, and I probably would have missed them out (probably due to my lack of time and resources to do so).


Nevertheless, I do intend to pen down some of my thoughts here as to why I am looking at these stocks.Hope it helps to sort out my thoughts. Of course, my thinking would probably change in the future (depending on how the company and stock prices perform).

Before I continue, I would like to perhaps highlight that this way of thinking could be fundamentally flawed. As I am thinking in terms of what the stock can provide for me first (in terms of dividend), ahead of the company’s fundamental, growth and valuation. Dividend payout is an outcome of earnings, and without continual good earnings, dividend payout is not sustainable.

Let’s see how should I structure my thought processes. I started off this post by looking at the macro (eg. the sectors), the yield vs payout ratio and balance sheet, and consequently wrote about some of my thoughts on RHT Health Trust.

I don’t think I can complete the details of all these stocks in a single post. 


1) Sector

I am by nature risk adverse. Basically,  when I invest, I tend to think long term. I like defensive sectors and companies that provide things or services that people use on a daily basis. The business itself should be boring and easy to understand.

“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” Peter Lynch

I don’t really like trading in and out of stocks and prefer to be very off hand once I have bought the stocks.


Consequently, it is no wonder that the first 4 stocks (RHT Health, Parkway Life REIT, First REIT and Vicplas) deal with healthcare.

Ok, Vicplas is not a pure healthcare stock (technically not in the healthcare sector). It operates through two segments, Pipes and Pipe Fittings, and Medical Devices. 

I have yet to come across the detailed breakdown of Vicplas revenue. Hence I can’t really gauge what percentage the medical devices section contribute to its overall profit. I also don’t have the complete 10 years financial data of Vicplas (data from Morningstar dates back to only 2009), but my feel so far is that it is a cyclical stock, and base on its short financial historical data, the performance varies widely year on year. On some years, it appears that there was no dividend payout (eg. 2003 to 2009, 2011, 2013, 2014).


Base on the recent 2015 Annual Report, the medical devices section (unfortunately) was loss making (although there was a reduction in its segmental negative results to $2.7 million in FY 2015 from $9.0 million in FY 2014). The pipes and pipe fitting section is the profit making portion than more than compensate for the loss.

For the REITs and Health Trust, the lease for healthcare properties are relatively longer (as compared to offices and retail). RHT’s average lease is 15 years- with the view of renewing for another 15 years.


Next, Yangzhijiang. This is definitely a cyclical business and stock. With reference to my earlier statement, I don’t think it applies (eg. a defensive business). However, ship building is a need. I do not foresee this business going away soon in the future, or disrupted in a major way.

Despite being in a ‘challenging’ industry, Yangzhijiang appears to be a likely candidate to emerge from the collapse of the shipbuilding industry in China and South Korea, stronger. If I am not wrong, the industry has consolidated from 3000 shipbuilding companies (in 2012) to less than 100 companies in China. Yangzhijian is also China’s biggest privately owned shipyard.

Hot stock: Yangzijiang shares galvanised by decent results (read here)

Nevertheless, I think the recent jump in the share price seems too premature. After all, the leap in other income is due to the recognition of advance payment from terminated shipbuilding contracts and lower expenses. There might be further pressure on the stock price downwards in the future.

F&B and Supermarket

E-commerce has a major impact on retail, and to a certain extend F&B. Well, I do see more F&B outlets nowadays as compared to retail spaces. I guess the experiential aspect of dining is still critical – so people still a place to wine and dine. (Of course, Deliveroo, UberEATS, etc could be disruptive to the traditional F&B business). Which is probably why I listed Japan Foods. However, the recent years’ profit (since 2014) has been declining resulting in a decline in dividend payout (despite an increase in payout ratio).

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On the other hand, in the case of Old Chang Kee, their business model isn’t that of a full-service restaurant – more finger food, and on the go. They do not require large areas (less rental) and are typically strategically located at busy areas (some near MRT stations). The company seems to be in an expansion mode.

Sheng Siong has also been in an expansion mode ( the only issue is that smaller supermarket players are bidding up the price of the HDB commercial units).

Sheng Siong locks horns with smaller players for HDB sites (read here)

In terms of business model, the sale of daily necessity is a great business. Of course, there are threats from e-commerce (eg. Redmart, Fairprice online). However, there will always be a niche in the local neighborhood for supermarkets.

In terms of growth, in the short list above, Sheng Siong has the highest ROE (~25%). The only other supermarket chain that can beat Sheng Siong’s ROE is Diary Farm (~31%). However, Sheng Siong has a stronger balance sheet (net cash with no debt).


2) Dividend Yield vs Payout Ratio and Balance Sheet

Although, like I said in my previous post, I started out by looking at the yield first… but a high yield which is unsustainable is pointless. One way to ensure that the company is not over-stretched in paying out the dividend is by looking at the payout ratio. Rightfully we should look at the historical payout ratio and see if there is a recent spike in the payout ratio.

Subsequently, I would like a strong balance sheet. Frankly, it is hard finding high dividend yield stocks with good balance sheets (harder to find those in net cash positions).

By default, most of the REITs and Business Trusts would be in net debt positions. REITs’ gearing can go up to 45%. And with the issuance of Perpetual Bonds / Securities, this makes it harder for retail investors to know the actual amount of debt (and the interests due).

So back to the list. The first 3 stocks consist of REITs and Health Trust. And the fourth stock (Vicplas) has a medical device section.

There is a reason why I put them together. Incidentally, Vicplas dividend payout is highly infrequent. So, that leaves us with RHT Health, First REIT and Parkway Life REIT.

After looking at the sector, I will look at their balance sheets. Of the three stocks (RHT Health, First REIT and Parkway Life REIT) – RHT Health Trust has the lowest gearing and the lowest debt / equity ratio.


However, its payout ratio through the years has been consistently more than 100%.


  • RHT Health Trust‘s portfolio comprises 12 Clinical Establishments, 4 Greenfield Clinical Establishments and 2 Operating Hospitals across India.
  • ParkwayLife REIT‘s portfolio comprises 49 properties totaling approximately S$1.7 billion, located in Singapore, Japan, and Malaysia (predominantly in Japan).
  • First REIT‘s portfolio consists of 17 properties across Asia, with a total asset value of S$1.27 billion. These include 13 properties in Indonesia comprising hospitals, an integrated hospital & mall, an integrated hospital & hotel and a hotel & country club, as well as three nursing homes in Singapore and one hospital in South Korea. 

In terms of fundamentals, there are many things I like about RHT Health in comparison to First REIT and ParkwayLife REIT:

  • As mentioned earlier, balance sheet wise, it appears stronger (the gearing and debt/equity ratio are relatively lower).
  • It also has the highest dividend yield (at 8.7%!).
  • Growth is good (better than the other 2). ROE at >20%.
  • Valuation (trailing PE and Price / Book) is low.

Well, 8.7% may seem suspiciously high, but considering that the India 10 year Government Bond yields 6.9%, 8.7% yield is alright (relatively ok). 

However, as with most REITs and Trusts, there are a lot of loopholes when I think about the sustainability of the dividend payout:

  1. RHT Health Trust was only listed on SGX mainboard not too long ago on September 25th 2012. Hence, base on the table above, there is only a short history of the dividend payout… It is really hard to gauge the longevity of its payout base on the short history (as a listed company).
  2. With the disposal of 51% of the compulsory convertible debentures (CCDs) in Fortis Hospotel and the impact demonetization in India, the DPU will be under pressure (both long and short term).
  3. In addition, with such a high payout ratio (more than 100%), the sustainability of the high yield is questionable.
  4. Consequently, unlike First REIT & ParkwayLife REIT, RHT Trust is subject to forex risks as its income is in Indian rupee.


More importantly, there are a few questions which I felt are unanswered:

a) There are a number of development projects as stated in its recent 3rd quarter financial results:

  1. Ludhiana Greenfield Clinical Establishment to be completed by April 2017,
  2. BG Road Brownfield Clinical Establishment to be completed by April 2017,
  3. Expansion of Mohali Clinical Establishment to be completed by March 2020,
  4. Jaipur Clinical Establishment to be completed by April 2017,
  5. Mulund Clinical Establishment to be completed by March 2018,
  6. Nagarbhavi Clinical Establishment to be completed by March 2018,
  7. Amritsar Clinical Establishment to be completed by March 2018,
  8. Noida Clinical Establishment to be completed by March 2018,
  9. Shalimar Bagh Clinical Establishment to be completed by Sept 2017.

Of these, there are 4 Greenfield Clinical Establishments (Total development costs are estimated at SGD 66 mil).

Where is the construction cost coming from? Private placement – resulting in the dilution of dividend payout? Perpetual Bonds? More loans (after all, the gearing has more headroom to ‘grow’)? I have no idea? Will the relatively low gearing change overnight?

Just out of curiosity. The dividend payout for 2015 was S$0.0761 per share (Total yield was 8.7%), while dividend payout for 2014 was S$0.0775 (Total yield was 8.86%). It did consider the dividend payout for 2016 as the yield during that year was just too high 36.82% (probably due to a one-off sale of the asset).

Total share outstanding now stands at 799.59 mils. So the ballpark figure of the total amount of dividend payout is approx. S$62 mil. That is just around S$4 mil below the construction cost. And payout ratio is already more than 100%… The impact of construction cost is a big question mark. 

Why would a company give out dividend money to investors and take on more loan to pay for construction?


b) It was always stated that healthcare need in India is great and RHT is well positioned to take advantage of it. That may be true, but I have read that there also many other healthcare clinics and hospitals located near to RHT’s clinical establishments.


A huge market doesn’t mean there is no intense competition (perhaps more so – given all the hype about the huge India market). How is RHT going to compete with so many competitors like Vijaya Hospital; Apollo Hospital, Manipal Hospitals and to a lesser extent, government-owned hospital, smaller private hospital groups, and new entrants?

In RHT’s recent third-quarter earnings report, the occupancy rate of RHT Health Trust’s portfolio came in at only 75% in the reporting quarter.

In comparison, in the case of First REIT as at 31 December 2016 (as stated in First REIT website), the reported occupancy is at 100%. For the case of ParkwayLife REIT, the committed occupancy as at 24 February 2017, is at 99.96%.

Incidentally, in the case of First REIT, the predominant tenant is its sponsor, PT Lippo Karawaci Tbk .


Am I missing something here? Given the huge market in India (middle class and upper class), and with RHT’s ‘award winning’ hospitals and quality assets (see below)- it only managed 75% occupancy?


And when I checked back in the 3rd quarter financial results report, since 3 quarter FY 2014, the occupancy rate for RHT has always been hovering about 72% to 84%. Mostly below 80%. (See below)


Nevertheless, RHT is a stock worth looking into…. still on the list. Oh yeah, this is not a recommendation to buy. Just some random thoughts from a blogger.

Posted in Dividend & Yield, Uncategorized | 1 Comment

Short list on ‘dividend’ stocks

I think this desire for dividend income is always there. The idea of passive income is always alluring. And why not? What’s wrong with investing for the sake of having passive income? Why invest in something that doesn’t produce much dividend (with no income – it is not even an asset).

My approach to stocks emphasized more on the growth and balance sheet of the companies. Perhaps the idea of peace of mind is more important to me.

However, like I said earlier, I do like to expand my portfolio to include higher dividend yield stocks. Nowadays, with rising interest rates and a slowing world economy, we don’t get many high yielding stocks. In the past, a decent yield would be in the range of 3% to 4%. Nowadays, 2% to 3% yield are considered good.

The markets have been buoyant, with markets around the world reaching new highs. The STI is no exception. I guess it is due to the expectation that the US President Trump will lower corporate tax from 35% to 15%.

Trump’s Promises to Corporate Leaders: Lower Taxes and Fewer Regulations (read here)

Well, I am not a ‘top-down’ investor, but I do from time to time take a cue from the global market trends esp. when the Dow Jones industrial average recently reach the highest level since 2009 (just can’t ignore).

I have been using this period to sell off some stocks and I do intend to sell off more in the coming weeks. For these stocks, I believe the upside is limited (again I could be wrong). The markets could be in for higher high in the future, especially if what President Trump promised materialized. I have no doubt about it. I would still be in stock (just not as much as in the past).

I do know of people who have been totally in cash since 2015, expecting a big crash to happen in 2016 or 2017… Well, I probably would never be totally in cash. I still like many of my stocks such as Riverstone, Colex, ISOTeam, Vicom etc… and intend on collecting more of them in the future.

In the meantime, I have been reading up on a no. of ‘high dividend’ stocks. This is a bit different from how I normally approach stocks. In this instance, I place more importance on dividend yield. For instance, I would select these stocks because of their dividend yield first, then I would look at their balance sheet, fundamentals, and possible growth story (ROE).

By ‘dividend yield’, like I said earlier, it is not easy to find really high yield stocks these days with ok fundamentals. I consider a min 3% yield as acceptable. Well, the key is to ensure that the dividend is sustainable or growing.

Having said all these, I do not foresee myself buying a lot of stocks in the near term (unless there are some sudden crashes or opportunities).  I always keep these stocks in my mind, and a ready war chest, to capitalize on possible opportunities in the future.

There are some fundamentally strong stocks which I have disregarded due to the possible disruptions in their growth story. For instance, Straco has always been a fundamentally strong stock (ROE: 20.32%, in net cash), and it has a dividend yield of 3.29% in 2016. However, with the opening of the future Haichang Polar Ocean Park, a marine-themed park developed by Haichang Holdings Ltd, in Shanghai. This might impact the revenue of Straco’s Shanghai Ocean Aquarium.

Did a table of these ‘dividend’ stocks for my own record. See below.





Posted in Dividend & Yield, REITS, Uncategorized | 2 Comments

My recent portfolio spring cleaning


I recently mentioned in my previous post, that I have sold my Fasternal Co stocks. Subsequently, I was on leave on Friday. On that day, while running my errands, I took some time to further sell some of my stocks, namely CapitaLand and SIA.

To be frank, I have been wanting to sell the SIA stocks I own for a very long time.

I have previous sold Sun Hung Kai many months ago -what is left are the odd lots I received (in lieu of dividends) previously. So technically, I am now left with 8 stocks in my portfolio.


To put things in perspective:

  1. I bought the Fasternal shares on Aug 2015 (Holding period was approximately 1 yr 6 months);
  2. Last bought CapitaLand shares on July 2015 (Holding period was approximately 1 yr 7 months);
  3. Last bought SIA share on Nov 2010 (Holding period was approximately 6 yrs 3 months).


There are various reasons why I wanted to sell them:

  • Big but slow growth

I consider CapitaLand and SIA relatively fundamentally weaker stocks as compared to the other stocks in my portfolio. Yes, in terms of Enterprise Value, they are giants, but in terms of growth they are not (CapitaLand has a recent ROE ttm of  6.11%, while SIA has a recent ROE ttm of 5.44%).

  • Dividend (ok, but not high yield)

I did not buy these stocks due to their yield.

  1. CapitaLand has a reasonable yield and frankly, I don’t mind keeping it just for the yield. In 2016, CapitaLand had a dividend yield of 2.55%. This yield value has been fluctuating between 1.7% to 2.55% from 2011 to 2016.
  2. SIA had a yield of 4.44% in 2016. That is actually quite good. However, its dividend yield is highly inconsistent. It reached a high of 13.10% in 2011 but dropped to 1.61% in 2012. Moreover, its stock price has dropped much more (since 2010) than the total dividend received.
  3. Fasternal had a yield of 3.14% in 2016. Between 2011 to 2016, the dividend yield fluctuated between 1.49% to 5.28%. However, non-resident aliens face a dividend tax rate of 30% on dividends paid out by U.S. companies. So given the low amount that I have invested (plus the fact that the yield wasn’t very high) and the tax rate, the resultant dividend income wasn’t fantastic.
  • Cyclical stocks (with cloudy growth forecast)

Typically, cyclical stocks do not make very good long term buy and hold stocks – unless you can time the cycle correctly. I do a terrible job at this.

However, the compelling reason isn’t because these are cyclical stocks, but rather the growth story behind these stocks.

Actually, I am optimistic about the long term growth story of CapitaLand and Fasternal. I think in the long term, there will an upward cycle. These are long term plays. However, near term wise – I am not sure about the growth prospect.

  • With CapitaLand, there are growth opportunities in China and regional Southeast Asia market. Yes, the price to book value is relatively low (0.88) – but it has been that low since 2011.
  • With Fasternal, it is a wide-moat company. A distributor like this is dealing with hundreds of thousands of customers and thousands of vendors for individual products. Its current price to book value is also low (7.75), but it has been hovering around that level (8.06 to 6.63) since 2013.

I bought SIA a long time ago. I think as an airline company, it faces intense competition in this industry and consequently, its fundamentals have deteriorated ever since. Its stock price has reflected that. I do not see much growth for SIA moving forward, and was really glad that I finally managed to sell the stock (although at a huge loss).

I do not see much growth for SIA moving forward, and was really glad that I finally managed to sell the stock (although at a huge loss). There was a slight uptrend in SIA stock price when oil price plunged. But the macro trend of the stock price is still downwards.



Why Spring Cleaning Now?

By selling these 3 stocks, there is a net loss. Not much, if I factor in the dividend received. The dividend received previously would cover for this loss. The recent surge in CapitaLand & Fasternal stock prices also helped.

I felt that given that the US market has reached new high recently, the odds of the markets correcting has become more.

In view of these, I like to take a more defensive position and try to reduce exposure to the weaker stocks (with relatively weak fundamentals). I do consider SIA and CapitaLand (and to a certain extend Fasternal, Sarine Tech, Golden Agri and Super Group) stocks as being more likely influenced by economic conditions.

As per the old Wall Street Adage: “let your winners run, and cut your losers.” In terms of stock price performance, if I sell my Riverstone, Colex, ISOTeam or even Vicom stocks, I would have locked in a significant amount of realized gain. Not a bad thing, given the odds of a market correction moving forward.

However, ultimately I am a bottom-up investor, not a top-down investor. If company fundamentals did not deteriorate much and overall growth story remain intact (or did not deteriorate significantly) – I would like to hold on to my ‘flowers’. My overall strategy will always be to average down as much as I can.

I also acknowledge that I can never accurately time the market crashes (ever) and will always be invested in stocks when markets correct or crash.

“It’s easy to make a mistake and do the opposite, pulling out the flowers and watering the weeds.  If you’re lucky enough to have one golden egg in your portfolio, it may not matter if you have a couple of rotten ones in there with it.”        Peter Lynch

Realistically speaking, I don’t see much problem with me holding on to stocks such as Riverstone, Colex, ISOTeam, Vicom and Fu Yuan Shou even during market crashes. To me, these stocks pass the ‘sleep test’ eg. I can sleep soundly when their stock price head south.

A significant part of their business is naturally resilient to adverse economic conditions eg. people would still use their services or products even if macroeconomic conditions turn south.

In this aspect, Vicom business model may be slightly arguable given that a significant part of its revenue comes from the Non-vehicle inspection (SETSCO), which is very correlated to the economic conditions.

Nevertheless, most of the remaining stocks (Sarine Tech, Super Group, Riverstone, Colex, ISOTeam, Vicom and Fu Yuan Shou) have good balance sheets, plus good growth (eg. relatively high ROE) —Not all, but most.

In gist: Defensive & Resilient business model / industry + Good balance sheet + Growth. In fact, I might buy more of their shares if their share prices drop during a correction or crash. So having an ample cash war chest ready is very important.

The only downside for some of these stocks is the lack of overseas exposure or expansion. For many, they derive most of their revenue from Singapore (eg. Colex, ISOTeam, Vicom). And also not very high dividend yield.

On another note, I might consider divesting my Super Group stocks if opportunities arise. (Growth story is debatable given the competitive instant coffee market).

However, as of now, I am quite comfortable with the amount in my war chest.


More income-driven approach

While I do not see myself plunging head first into actively buying high dividend yield stocks, I would definitely consider stocks with acceptable fundamentals and reasonable yield. The dividend yield factor would slowly make its way up my evaluation criteria.

If opportunities allow (eg. having a larger margin of safety during sharp market corrections plus other factors), I might consider slow growth companies with relatively weak fundamentals but with a long history of consistent high dividend payouts. I consider these as “Perfect Storm” situations eg. Market corrections or crash coinciding with temporary industry down-cycle or slow-down, and temporary internal company bad news. These I know is beyond my control, and I have to patiently wait.

I consider these confluences of bad news as “Perfect Storm” situations eg. Market corrections or crash coinciding with temporary industry down-cycle or slow-down, or/and temporary internal company bad news. However, provided the long-term fundamentals and growth story of the companies are still intact, and not deteriorated significantly.

I am sure a lot of people do not like market crashes or these so-called “Perfect Storm”. However, to me these are rare. I treat these as golden opportunities. For someone who has been waiting on the sideline for months (the market peaks kind of creates a psychological barrier preventing me from buying)… these might not be a bad thing, seeing it from the long term perspective.

I view these as more risky ventures (hence the need for a high margin of safety) eg. Yangzhijiang, Global Investment Limited, HPH Trust, Accordia Golf Trust and the various REITs (esp. Viva Trust, AIMS AMP Capital Industrial REIT, LIMRT, etc).

Having said that, there is a certain amount of resilient of high dividend stocks to market declines (probably due to their high yield)… well, one can never know. With no or little earnings, free cash flow or not in a net cash position, dividend payout is not guaranteed.

Lastly, I don’t just justify my purchase of these high yielding stocks by the high yield…. that is NOT a reason to purchase.



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