ISOTeam secured a series of new contracts

Despite the challenging economic condition, ISOTeam secured a series of new contracts worth $22.7 million, including a third and single largest renewable energy installation project, worth around $6.3 million.

ISOTeam is an eco-conscious Repairs and Redecoration (“R&R”) and Addition and Alteration (“A&A”) specialist in Singapore. I have previously covered this company in my blog before. Founded in 1998 and listed on Catalist of the Singapore Exchange, ISOTeam has successfully undertaken more than 300 public and private sector R&R and A&A projects for more than 3,000 buildings and counting since inception.

With  market capitalization of only $121 million, ISOTeam is considered a small player in SGX. However, the company differentiates itself from its competitors by branding itself as an eco-conscious enterprise. They integrate green methodologies in their R&R, A&A and Others projects, and actively work with strategic partners and technology companies to develop and commercialise green solutions / products.

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Its foray into the renewable energy segment is also in line with the government’s SolarNova programme, which aims to have solar power contribute 350 megawatt-peak (MWp) to Singapore’s energy supply by 2020. There were 400 HDB blocks with solar panels in 2015, and the programme targets to have around 5,500 blocks by 2020, or clean energy for 55,000 four-room flats annually.

I continue to like ISOTeam for its ability to keep winning contracts for performing maintenance works for HDB flats. The contracts secured are expected to have a positive impact on the earnings per share and net tangible assets per share for the current financial year ending 30 June 2017.

Read my previous posts on ISOTeam:

  1. ISOTeam shines in the stock market
  2. ISOTeam
  3. Is ISOTeam an undervalued stock?

ISOTeam’s track record of winning tenders from town council probably played a part in its winning first HDB Home Improvement Programme project worth S$17.5

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Developing your growth mindset

In response to my previous article “Surbana terminated 50 staff”, one reader blasted me for writing a disguised advertorial. I was a bit disappointed because my intention of writing that article was actually to encourage readers to develop a growth mindset. If you are interested in developing your potential, please do read on.

The term “growth mindset” was coined by Dr Dweck, who discovered that our mindset can shape our understanding of learning. Broadly speaking, it means that we can actually grow our brain to enhance our performance in life and indirectly increase our wealth. Arising from this, we can either choose to have a fixed or growth mindset.

Some people believe that human beings are born with a certain level of intelligence and thus, assume that they can’t do much to change their destiny in this respect. This mentality is called “fixed mindset”, which curtails learning opportunities because people who have fixed mindset choose to believe they cannot change for the better.

On the other hand, there are people who believe in growing themselves through learning. They are not afraid of learning new things and have a knack of learning from their mistakes. Such people possess “growth mindset” and are often motivated by success. They are resilient and are always curious to learn.

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Which category of personality do you fall in? As a wealth builder, it is important to keep learning and growing our knowledge. Sometimes I am guilty of having a fixed mindset, especially when it comes to learning new stuff. But I keep telling myself that in order to improve myself, I have to overcome my negative thoughts and persevere. I view mistakes as lessons for me to grow and view wealth as a journey rather than a destination.

In the early days of my investment …

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OCBC considering sale of United Engineers Ltd

OCBC started the year with a bang by announcing that it is considering the sale of United Engineers Ltd (again). Two years ago, the local bank had tried to divest United Engineers (UEL) but the deal did not materialize.

On 7 January 2017, OCBC and its subsidiary, Great Eastern Holding (GEH), appointed Credit Suisse (Singapore) Limited as their financial adviser in connection with the strategic review encompassing the whole of the combined stakes of OCBC Bank and GEH in UEL and WBL.

Both OCBC and GEH hold about 30% of UEL. If the move is successful, it will be a windfall for OCBC as the market capitalization of United Engineers is about $1.7 billion. In view of this, investors immediately bought into the news and chased OCBC share price to nine month high of $9.38.

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I believe this time round, the sale of UEL is imminent as the company had been disposing its assets for the past nine months. This included the 42.2% effective interest in Multi-Fineline Electronix, Inc. (MFLEX); 62.6% effective interest in Suzhou Speedling Co., Ltd.; 100% interest in UES Holdings Pte. Ltd.and its subsidiaries and associates; 100% interest in UE Envirotech Pte. Ltd. and its subsidiaries; 100% interest in UE Asia Pacific (Beijing) Co., Ltd. and its subsidiary; and 100% interest in Hengyang City UE Songmu Water Co., Ltd.

So it is a right move by OCBC to dispose its stake in United Engineers? Well it’s a tough call because while the property developer and engineering firm is facing headwinds in the sluggish property market, it is still making healthy profits. Net profits for continuing operations was $31 million for Q3 2016, a decrease of 16% compared to last year.

Balance sheet was fairly sound except that long-term borrowings of $897 million may weigh on the company’s …

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Surbana terminated 50 staff

Temasek Holding’s Surbana Jurong terminated about 50 staff who were deemed as “poor performers”. The layoffs occurred a couple of weeks ago, just before the Chinese New Year.

Surbana has stressed that the terminations were not retrenchment exercise. The staff were let go simply because of their poor performances.

It is indeed a sad day for Singapore. Some people may argue that many of the affected staff are foreigners and hence there is no need to feel sorry for them. But the issue is not whether local Singaporeans or foreign talents are being laid off. The issue is whether Singapore employers are beginning to lose their moral compass.

Make no mistake, bottom-line is of course important for every enterprise. Obviously companies are entitled to sack staff who cannot perform. But surely there should be ample time or few month’s grace period for the affected staff to improve? And surely there should be more sensible or even humane time to fire them? Would it even hurt their financial positions to postpone the firing after the Chinese New Year period?

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Losing your job is a very terrible feeling. It not only hurts your ego but also damages your wealth. To lose a job right before the festive season is even worse.

Furthermore, by announcing to the whole world that these ex-staff performed badly, Surbana inadvertently deterred potential employers from hiring them. After all, which company would want to take in people who cannot perform?

Some readers may even call for the authorities to intervene but the matter of fact is that the government is also powerless. Surbana has not violated any labor laws in this case because they have cited a legitimate reason for terminating the staff. Legally, they are not wrong but morally, in my point of view, they have crossed …

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Will Noble Group do an OSIM or Swiber?

Will Noble Group do an OSIM or Swiber Holdings? The embattled commodity trader is currently at a cross-road as many investors wonder if it can pull off a dramatic recovery.

Once a blue chip stalwart in Singapore stock exchange, the Hong Kong based company is now trading at penny stock price level. The free fall of Noble Group share price wiped off billion of dollars from its market capitalization value and it would have being included in SGX’s watchlist had the Minimum Trading Price rule not being revised recently.

Crisis for Noble Group?

One of the worst fears among investors must be Noble Group becoming the next Swiber, which collapsed and went under judicial management in 2016. The fall of Swiber was due to the prolonged slump in oil prices causing oil and gas companies to cancel infrastructure projects. Another factor that led to Swiber’s shocking downfall was the amount of debts it took on. It was reported that it owed money to 10 banks and DBS alone had about $700 million worth of loan exposure to Swiber.

Those who invested in Swiber shares or its junk bonds are unlikely to get back their hard-earned money.

Similar to Swiber, Noble Group endured a challenging 2016 due to the collapse of commodity prices and the slowdown in China’s economy. It also has multi-billion dollars worth of debts. Nonetheless, the similarities stop there and frankly speaking, barring unforeseen circumstances, it is unlikely that Noble Group would suffer the same fate as Swiber.

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In 2016, the company has taken steps to raise funds through a $500 million rights issue and also pared down debts through asset sales. The business is also diversified enough to withstand the ongoing slump in commodity prices, with support from its growing Metals and Mining Segment. It also has …

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Golden start for gold price

What a golden start for gold! Since the beginning of 2017, gold went on a rampage and increased in value by 6% within 2 weeks. This will be a short post to capture the latest trend on gold price.

What actually fuelled the surge in gold price? Many analysts could not really pinpoint the real cause but it certainly seems like 2016 all over again. Back then, when the US Federal Reserve raised interest rates for the first time in many years at the end of 2015, gold price also dramatically rose in value.

Will history repeats itself for gold price? The current trend indicates so. Since US Federal Reserve raised interest rates by 25 basis points on 14 December 2016, gold price crashed to USD 1129 per ounce but subsequently recovered and spiked to USD 1200 per ounce in 2017.

Conventional wisdom indicates that once interest rates in USA increased, gold price will likely drop because the precious metals does not yield interest. The opportunity cost of holding physical metal under such circumstances made cash more appealing. However, the world has evolved and things have become more complicated.

gold bullion Singapore

In fact, even though US has increased interest rates, it does not mean big economies like the European countries, China and Japan will follow suit. In fact, Japan and several European countries are still having Negative Interest Rate Policy (NIRP). Further monetary stimulus, in the form of quantitative easing, may also be possible in 2017 in these countries.

So is this the best time to buy gold? I would say yes because most wealth builders from the East like to buy gold when the price bottomed out and started to increase in value. Gold price has been bombed out in 2016 and the beginning of 2017 has seen the price galloped.…

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Formidable challenger for Challenger Technologies Limited

Crisis? What crisis? SGX mainboard-listed company, Challlenger Technologies Limited, appears unfazed in the aftermath of the closure of its 53,000 sqft megastore at Funan DigitaLife Mall since December 2015. Last year has been challenging due to the weak economic sentiment but on the basis of the 3Q2016 financial results, it seems that Challenger managed to reduce the impact of its megastore closure.

Last week. I visited the Challenger Technologies store at Bedok Point mall to purchase a software and was very impressed by their staff’s customer service and efficiency. Prior to the trip, I had done some research online and thus only spend less than 5 minutes in the shop. The whole experience had been positive but in the face of stiff competition from online and brick-and-mortar players in the market, Challenger faces a daunting journey ahead.

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While Challenger tried to downplay the significance of the closure of its Funan DigitaLife mall through the rapid expansion of heartland retail stores, it has since moved on and announced a new flagship store at Bugis Junction. Spanning almost 14,000 square feet in space, the basement 1 location is set to open by the second quarter of 2017. In addition to complementing the existing Challenger store at level 3 Bugis Junction, the new flagship store will add to the Group’s overall portfolio of almost 50 stores island-wide.

In today’s context, the concept of a “destination specialist shopping mall” is not relevant anymore as there are so many channels for consumers to make purchases with the advent of e-commerce. In this respect, Challenger has [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Lost

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SATS flying high in 2016

While the rest of the SGX-listed companies huffed and puffed their way through 2016, SATS was flying high. The share price of this blue chip darling even stormed to a record high of $5.11 in September 2016, setting a gold standard among fellow STI players. Amid the sluggish SGX market performance, it seems very strange that its stock has been so bullish. Just what did the management do that set the company apart from the rest?

The key reason for SATS’ strong performance might be due to its investment moats in two niches –  Gateway Services and Food Solutions. Their Gateway Services encompass airfreight handling, passenger services, ramp handling, baggage handling, aviation security services, aircraft interior and exterior cleaning as well as cruise centre management. Food Solutions include airline catering, institutional and remote catering, aviation laundry as well as food distribution and logistics.

Being a dominant player in provision of gateway services and food supplies, SATS derived most of its revenue from the aviation sector. For 1H16/17, revenue of $752.4 million came from aviation sector, while only $110 million of revenue were derived from non-aviation and corporate.

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Investments

SATS has many associates, joint ventures and subsidiaries but they contributed only $23.7 million profit in 1H16/17. Among them are Singapore Food Industries (SFI) which provides food services to the Singapore Armed Forces and SATS-Creuers Cruise Services which provides gateway services for cruise terminals through . However, AISATS, AAT, BAIK, MIC and PT JAS contributed approximately 75% of their share of after-tax profits from associates and joint ventures.

One reason for SATS massive ran up in stock price could be also due to its strong balance sheet and free cash flow. The debt-to-equity ration was healthy at 0.08 times while cash and short-term deposits stood at $452.7 million. The free cash flow …

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