Author: sgwealthbuilder

ISOTeam is a Catalist listed stock which I have been wanting to cover for a long time but had not done so because I was under the impression that the company is in small player in the building and construction industry. However, I found out recently that I was wrong.

Company background

The company is actually an established player in the building maintenance and estate upgrading industry in Singapore. ISOTeam has over 15 years of Repairs & Redecoration (R&R) and Addition & Alteration (A&A) experience, and has successfully undertaken more than 300 public and private sector R&R and A&A projects involving close to 3,000 buildings. ISOTeam is also the exclusive applicator of paint works for both SKK and Nippon Paint in the public housing sector in Singapore.

I like ISOTeam for its competitive strengths in its strong track record of project completions, early mover in eco-conscious solutions and diversified capabilities in servicing residential, commercial, industrial and institutional segments. All these strengths enabled ISOTeam to repeatedly winning tenders for public sector projects even when they are not the lowest in price.

Share price performance

ISOTeam launched IPO in July 2013 with 32.2 million shares at 22 cents each. For the past three years, the share prices increased steadily from $0.22 to $0.30 based on the strength of increasing revenue and profits.

And so the saga continues. On 8 April 2016, OSIM increased the buy-out offer price from $1.39 to $1.41. The revised offer price is basically on a cum-dividend basis and will be the final offer price.

To be frank, the revised price is nothing to shout about and is unlikely to sway those dissent shareholders who refused to accept Ron Sim’s offers. Whether maverick entrepreneur Ron Sim can successfully de-list OSIM remains to be seen but it would be interesting to analyse what exactly prompted this shocking corporate move of the year.

Bad times ahead?

One possible reason for Ron Sim to de-list OSIM might be because of a possible global economic downturn. After all, China is slowing down now and OSIM had previously banked on rich Chinese’s spending power. A look at its global network of outlets revealed that the number of outlets in North Asia has been reduced from 365 to 360. Overall, the company is also reducing its GNC and TWG Tea outlets.

As OSIM’s core business is still in selling luxury massage armchair, a global economic crisis will definitely impact its share price negatively. Drawing from the Great Financial Crisis (GFC) in 2008, its share price tumbled to a record low of $0.04.

Founded in the 1970s in Singapore, Tat Hong is a listed company that provides crane rental services in the construction and offshore marine industry. It now operates 1,500 cranes across the region. By tonnage, it is the seventh largest crane rental company worldwide. Is it worth buying Tat Hong shares now? In this article, I will share my insights on Tat Hong’s investment value.

On 15 March 2016, the company announced in the SGX website that “it has been approached in connection with a potential transaction which may or may not lead to an acquisition of the issued share capital of the Company. Discussions are preliminary and there is no certainty or assurance whatsoever that these discussions will result in any transaction”. The announcement on potential takeover offer led to a massive surge in Tat Hong’s share price the next day. The stock rocketed from 41.5 cents to 63.5 cents.

Is this a value trap or value buy? Before jumping the gun, investors or traders must put things into perspective and evaluate whether Tat Hong’s shares are worth buying or trading. Since 2007, Tat Hong’s share price has tumbled from a high of $3.36 and is now languishing at a 6 year low of $0.58.

The Hour Glass is a listed luxury watch retail group in Asia with headquarter in Singapore. Founded in 1979 by the husband and wife team, Dr. Henry Tay and Dato’ Jannie Tay, the company started operation in Lucky Plaza through a partnership with Metro Holdings. In recent years, the company’s share price has surged from $0.30 in 2009 to almost $2.00 in 2014. Post stock-split of a one-into-three exercise in 2014, the current share price is now trading at $0.74.

What sets apart The Hour Glass from other luxury watch competitors is that it also has a substantial property portfolio. According to its 3Q2016 financial report, the group is holding on to $64 million worth of investment properties. In 2015, it acquired two Australian properties, namely an 11,000 square feet heritage listed retail and commercial property in Sydney and an 8,000 square feet retail property in Brisbane’s prime luxury retail precinct for $6.3 million. Such property investments reflect the listed company’s strategy for growth in the future.

Besides laying the groundwork for future growth, it is also making the effort to grow its core business. Amid the global economy uncertainties, The Hour Glass acquired the Watches of Switzerland in 2015 for $13.3 million.

Raffles Medical Group (RMG) recently announced share split of each company share into three ordinary shares. It is not a done deal yet and the proposed move is still subject to approval of shareholders at a general meeting and the approval of SGX.

The rationale given is that the proposed share split will make the company shares more accessible to retail investors because of the reduction of each board lot. In addition, the move will also expand the shareholder base from the current approximate 7,780 shareholders.

I am not invested in this counter but have been tracking the company’s performance. Given that SGX has reduced the board lot trading size from 1000 to 100, RMG’s rationale for the stock split is not exactly convincing. This is because most retail investors can afford investing in RMG at current price, albeit at lower board lot size. On the flipside, existing shareholders may face risks of a decline in their share value after the implementation of the proposed share split. There is no assurance that the subdivided shares will be $1.39 after the implementation of the stock split.

On its financial health, RMG is doing reasonably well. Profit after tax is $69.3 million in 2015, a growth of 2.4% increase from $67.6 million in 2014.

OSIM founder may not succeed in privatising the company? When the market is bullish, news of merger and acquisitions are usually met with positivity because generally, valuations will be higher and thus, the take-over offers would often be attractive to shareholders. However, the case is usually reverse during bear markets because of the possibility of hostile take-overs by competitors.

Sometimes, the management may even attempt to privatise the company on the cheap with the eventual aim of sharing the profits and dividends among the major shareholders. This is probably the case for OSIM, which recently announced a shocking voluntary cash offer by the founder, Ron Sim. However, whether Ron can succeed in privatising OSIM remains a big question mark. In this article, similar experience can be drawn from K1 Ventures, which made similar approach back in 2012.

Firstly, under the SGX Listing Rule, in order for the privatisation offer to be successful, OSIM founder must acquire at least 90% of the total number of issued shares (excluding treasury shares). Thereafter, OSIM founder is required to buy over the remaining shares of those “dissenting shareholders” who refused to accept his initial cash offer of $1.32 per share. Currently, the founder holds 69.25% of the total shares and thus requires only an additional of 20.75% to delist OSIM.

For many years, OSIM has been buying back its shares from the open market. As an investor, I had always been curious why the company was so aggressive. Nevertheless, purchasing shares from the open market is a good sign because it means the management has a lot of confidence in its growth prospect.

On 7 March 2016, legendary entrepreneur Ron Sim finally decided to show-hand. The founder of famous local luxury massage arm-chair maker announced a voluntary unconditional cash offer of S$1.32 for all the issued ordinary shares in the Company. The offer was made through Vision Three Pte. Ltd.

The last shares buy back announcement by OSIM was on 3 November 2015 and the company has already amassed 31,089,400.

The offer price represents a premium of approximately 31.8% and 33.5% to the volume-weighted average price (“VWAP”) per share for the corresponding one-month and three-month periods up to and including 29 February 2016, respectively.

I am a big fan of OSIM and has been tracking the stock for several years. In one of my previous posts on OSIM, I pointed out that the OSIM was trading at $0.04 per share during the Great Financial Crisis. Yes, that’s right, $0.04.

Many financial advisors like to say that investor should not attempt to time the market. I do not disagree on this point but then again, there are times investor should really avoid investing in the stock market, especially during bull-runs. Then, there are times investors should enter the stock market because of the abundance of bargains. Entering the stock market at the wrong time and choosing the wrong stock to invest in without circle of competence can potentially damage your financial portfolio. It can even ruin your wealth. Let’s take a look at Keppel Corporation and review whether it is worth investing in it now.

Investors who bought Keppel Corporation shares in 2007 and hold them till now will be staring at massive paper losses. This is because they would have bought at a high of $12.00 to $13.00 per share and now the share price is [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.]

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The nightmare continues. Just when investors think that the stock market storm is over, the correction resumes lately. The reality is that business fundamentals don’t change overnight and so does the stock market. China’s slow down began a couple of years ago and not weeks before. The build up to the oil supply glut began a few years ago and not recently. So investors need to be clear that this down-turn is going to be a painfully long winter and it’s not going to go away soon. But amid the bearish market sentiment, there are certainly companies that are worth investing but currently facing price corrections. Among them is SingTel.

The first thing that investors should note is that SingTel is a regional giant that serves more than 550 million mobile customers in Asia, Australia and Africa. This investment moat sets them apart from the other two smaller local rivals, M1 and Starhub. Having this investment moat gives SingTel the economies of scale for procurement and marketing. Most importantly, being the market leader, they are able to influence market trends and set data and mobile plan prices to their advantages.

Over the past one year, the announcement of a fourth telco in Singapore has brought a lot of buzz to the market.

One of the most over-looked value stocks in Singapore’s stock market, K1 Ventures is giving out a huge Chinese New Year Hong Bao to its investors. Amid the bearish stock market sentiments, K1 Ventures is rewarding shareholders $0.21 dividend per share, even though it recorded a loss of $8.47 million for 2Q 2016. Notwithstanding this, I am sold on the company’s performance and bought the stock at $0.965 based on the management investment track record. In this article, I will share how to derive my entry and exit level for K1 Ventures.

K1 Ventures’ proven record

Since the Greenstreet Partners assumed management responsibilities within K1 Ventures, they have distributed $0.35 per share or $742 million, a “frightening record” that is extremely difficult to match in Singapore market, given the fact that K1 Ventures used to trade at $0.20 to $0.30 range. The company choose to be low profile all the while and thus, has been overlooked by many SGX investors. Recently, the company underwent a 5-in-1 share consolidation to meet SGX’s minimum trading price requirements, resulting in the share price to be adjusted to $0.90 to $1.00 range.

Ever since the failed management takeover in 2013, the company has been in divestment mode.

Last week, the big boys, the so-called “whales” are in action again. Keppel Corporation was the subject target and was relentlessly shorted in huge volumes. The short sell orders executed were:

• 25 January 2016: Short sale volume: 4,918,000 worth SGD 24,158,094
• 26 January 2016: Short sale volume: 5,875,800 worth SGD 27,831,381
• 27 January 2016: Short sale volume: 3,895,600 worth SGD 18,456,686

It seems like the whales are hell-bent on lowering the value of Keppel Corporation as oil prices crash to a 14-year low. Due to the oil crisis, Keppel Corp latest Q4 profit fell 44% and its 2015 profit dropped to a 5-year low. Incidentally, Keppel Corp is also a conglomerate with stakes in the property sector, which is also facing a slowdown. The double-whammy gave the whales the perfect opportunity to “wallop” Keppel Corporation and short the counter like nobody’s business.

Of course there were other blue chips which suffered from the recent whales’ attacks but the data from SGX’s Marking of Selling Orders revealed that Keppel Corporation was consistently being shorted for practically the whole of last month. If you are holding on to Keppel Corp shares, you have to be careful because this is abnormal. If the whales consistently targeted and whacked your stocks ferociously, it could mean something big is looming.

In perhaps one of the most disturbing scenes ever shown on TV, Adam Cheng’s character in TVB’s block-buster drama threw his four sons from the top of the stock exchange building after losing his fortunes in the stock market. That was in 1992 and the controversial scene was aired during the first episode of the epic drama. If the Hong Kong producers wanted to deliver a devastating impact on viewers, they succeeded because until today, this drama set the gold standard for a stock market drama series.

I was only 12 when The Greed of Man was shown and obviously I knew nothing about the stock market back then. Nonetheless, the drama has delivered a shocking message and that is to always respect the market. You can make a fortune from the stock market and conversely, you can also lose everything to the stock market if you cannot manage your emotions. At the end of the day, you must remember that nobody can beat the market.

In the real life, many Singapore investors and bloggers were taught a sobering lesson on how cruel the market can be. Within a year, the mighty Keppel Corporation’s stock price plummeted from $9.00 to $5.00.