May 29, 2014

Over $2 billion of construction projects deferred to stagger foreign worker demand

SINGAPORE - More than $2 billion of public construction projects will be deferred in order to spread out labour demand, as the Government continues to slow the inflow of foreign workers, Prime Minister Lee Hsien Loong said on Wednesday.
This will not affect projects which are urgent, such as Housing Board flats and train network expansion. Instead, the delays will apply to the new Science Centre and extensions to Gardens by the Bay, for example.
Singapore could save 20,000 or 30,000 foreign workers that way, he said: "These are necessary trade-offs and I hope Singaporeans will understand."
Keeping an eye on construction manpower, and foreign manpower more generally, is part of the Government's efforts to manage Singapore's population.
Mr Lee replied that the Government will help all firms to adapt to having fewer foreign workers, but cannot ease up on foreign worker limits. 
Source: ST, May 28, 2014

This is bad news for construction companies such as Yongnam (+2.04%) that rely heavily on public contracts and have yet to accumulate sizeable order books for 2014. 

It does seem odd to intentionally defer projects on the basis of foreign worker demand. As the article says, urgent projects such as housing and train network expansion will not be affected. I would not expect infrastructure projects to be delayed as every other ASEAN member is rushing out infrastructure upgrades for the AEC.

May 26, 2014

Simple guide to dividend collection from Thai-listed stocks

No, this is not another get-rich-financial-freedom-with-dividends type of post. This is a simple write-up about receiving dividends from Thai-listed companies when the shares are bought through a local (Singapore) broker.

Here are some facts about the SET;

1st quarter has passed and many companies distributed dividends and one of them was Krung Thai Bank that paid 0.88 baht/share.

Example calculation
No. of shares: 1000
Dividend/Share: 0.88 baht
Exchange rate: 0.03762

Tax/Broker handling fees;
Thailand: 10% withholding tax
Singapore: $10 + GST = $10.70

Gross dividend will be 880 baht / S$ 33.11
After 10% tax from Thai side: 792 baht / 29.80
After fees from SG: S$ 19.10


After the payable date given by the company, I received the dividend in the mailbox 10 days later. What happened was the dividend will be taxed first from Thailand, then the handling fees/GST from the Singapore broker will be deducted. A cheque was be mailed to me from my broker so I do not have any direct interaction with the Thai company at all.

At first glance, it seems to be very unattractive as the final net dividend received is barely 60% of the declared dividend, and a rough calculation of the dividend yield based on 1000 shares will be approximately 2.5 to 3% net, while the gross yield is about 4.8%.

However the handling fees are a fixed S$10.70 so it is negligible when you have accumulated a large position, however the handling fees are imposed per transaction. This will be annoying when you receive multiple dividends because they are charged separately.

I have previously mentioned here in the comments that I had been unhappy with my local brokerage and that a Thai domestic broker was more practical.

There are many reasons to and not to seek exposure to foreign stock markets, especially Thailand's. If you hold a very fearful and skeptical view, you should step back and ponder whether your fears are exaggerated, especially when most western media tend to have pretty sloppy or biased reporting regarding Thailand. On the other hand if you are extremely optimistic, it is also wise to re-examine your reasons for being so, and whether certain arrangements that you think are in place now will continue to be so in future.

May 17, 2014

Gazprom targets SGX listing

Gazprom seeking a secondary listing in money-friendly Singapore. You always wonder if the quality listings knock on Hong Kong's doors first, while the ones that Hong Kong kicks out then seek Singapore's.

OAO Gazprom, the natural-gas export monopoly, is in talks to list its shares with Singapore Exchange Ltd. (SGX), the Russian company’s spokesman said.
Gazprom is preparing documents for the listing, which may happen as early as July, Sergei Kupriyanov said by phone today. The company wants its depositary receipts to trade round the clock and aims to boost the liquidity of its stock with the listing, the Interfax news service reported today, citing a Gazprom executive it didn’t identify. As much as 7 percent of its shares will trade on the Asian bourse, Interfax said. Bloomberg

Moscow-listed Gazprom has a market capitalisation of around US$95bn.
Although a Singapore listing will be a first for a Russian company, it is likely to be a controversial move because many banks and investors are limiting their exposure to Russian companies, especially state-linked ones, after the country annexed Ukraine’s Crimea region in March.

The US and Europe have already imposed sanctions on Russian individuals and some companies, and have threatened to broaden these if the country interferes with polls in Ukraine later this month.
“They probably want to tap as many pockets of demand in Asia as possible,” said one ECM banker. “If they do it now, it’s going to be cheap [for investors].”

Russian companies have been eyeing Asia’s capital markets in recent weeks in a bid to access a new pool of investors, since some European and US funds have become less willing to take exposure to the name.

Further sanctions and a worsening of the political situation could hurt profits at Gazprom, which announced on May 12 that it would change the terms of its supply contract to Ukraine to require payment in advance for gas supplies, after outstanding debt rose to US$3.5bn.

It said that, if Ukraine did not pay for its June supplies come June 2, no gas would be delivered. The Russian Government owns a 49.34% stake in Gazprom.

If Russia cuts supplies to Ukraine, the European Union is reported to be considering reducing imports of such gas, which would impact Gazprom. However, Gazprom was currently negotiating to supply China with natural gas, which could be concluded this week, Reuters reported.

The SGX led a roadshow in Russia in 2010 to attract Russian companies to list in Singapore, but, so far, none have announced plans to do so. There are not thought to be any technical complications with listing a Russian company in Singapore.

“Singapore is usually quite open to foreign issuers,” said another source.
Russia’s only Asian listing to date has been in Hong Kong, with the US$2.2bn IPO of aluminium producer United Company Rusal in January 2010. That stock closed on May 15 at HK$3.55, far below its IPO price of HK$10.80.

A planned Hong Kong IPO from Russian hydropower utility EuroSibEnergo was pulled in 2011, while proposed Stock Exchange of Hong Kong listings of molybdenum miner SMR, Transcontainer and Kamchatka Gold never came to pass. IFR Asia

May 16, 2014

Yongnam's Weak Erection Activities and Net Loss for the First Quarter


16/5/2014 closing price: $0.235 -4.08%, XD of $0.006/share

Revenue down due to business slowdown and lower margin projects. Overheads cost increased while staff expenses decreased.

Secured orders for 1Q14 at S$54.3 million with total order book of S$316 million.


1Q14: Revenue decreased 12.4% to S$71.8 million (vs. 1Q13). 

Specialist Civil Engineering revenue decreased 22.1% y-o-y to S$28.5 million in 1Q14 (vs. S$36.5 million in 1Q13).

Structural Steelworks revenue decreased 4.5% to S$43.3 million in 1Q14 (vs. S$45.4 million in 1Q13).

Staff expenses decreased by 28.7% to S$4.4 million

Earnings and Dividends

1Q14: Net loss after tax of S$1.9 million (vs. net profit of S$11.5 million 1Q13). Contributions from ongoing projects in 1Q14 were lower than projects that had higher margin in 1Q13. 

Higher fixed production and project overheads due to lower fabrication and erection activities contributed to the net loss.

CEO comment: Gross margin from ongoing projects are expected to come down to normal industry-level.

Gross profit margin: 4.1%

Dividend of $0.006/share for FY13

Balance Sheet 

1Q14: Higher bank borrowings increased bank interest and charges to S$1.3 million from S$0.7 million.

Net gearing slightly increased to 0.55 times compared to 0.53 times q-o-q.


1Q14: NAV 24.79 cents

Potential Catalysts
1. Potential contract wins from Singapore, Hong Kong, Macau and the Middle East (only from 2H14).

2. Hanthawaddy Airport

Disclaimer: I have vested interests in Yongnam but don't listen to me, I am just a clueless punter. 

May 13, 2014

24 Of The Smartest Travel Hacks

What do you do when the market is at low season? Travel.

A friend shared this link with me and some of the tips are pretty useful.

#1. When booking flights and hotels online enable private browsing. Travel sites often track your visits and will raise the price simply because you’ve visited before. 
Wow I did not know that, definitely something to try.

#17. Use Google Maps offline by typing “OK Maps” and the visible area will save for future access.
I have not tried this, usually I save screenshots of Google Maps on my phone before I travel, such as crucial journeys like airport to train/hotel.

#20.  If you forget your wall plug, you  can charge devices through the USB slot on a TV.
Smart idea, totally did not think of this. Used to have to take turns sharing the charger when I forgot to bring the 3-pin part of the charger.

#21. When you start a new SD card on your digital camera, take a selfie. If you lose your camera and have to claim it from a lost and found, you can prove it’s yours. 
That's right. Same goes for your big face as handphone/tablet wallpaper or in the photo album. Wonder if there is a good way to prove that your infant is yours, if some woman in China starts screaming in public that your kid is actually hers.

#22. Get WiFi passwords by checking comments on FourSquare.
Don't use Foursquare but I might try it for this, but then I need wifi in the first place.

#24. On the last day of your trip to a foreign country, collect all of your loose change and give it to the homeless.
This is a very good suggestion. Usually I do this on the last couple of days, if not I will drop off all my coins into the public donation box at the Airport.

Read the rest of the article from Lifebuzz, which apparently took the same article from Distractify. LOL!

May 10, 2014

Minor International record first quarter (MINT.BK)

Minor International (MINT) has 4 business segments of Hotel/Spa, Mixed Use, Restaurant and Retail. Some of its more well-known restaurants are Thai Express and Xin Wang Hong Kong Cafe in Singapore. 

It has about 1500 restaurants under various brands in 19 countries. It also invests in or owns and operates a portfolio of 103 hotels and serviced suites with over 12,000 rooms around the world. The company is also involved in the retail trading and contract manufacturing of fashion, cosmetics and household products.


1Q14: Revenue increased 9% (vs. 1Q13). Total expenses are up almost 14%.

Earnings and Dividends

FY13: EPS grew by 17% (vs. FY12). Dividend yield is about 1.46% based on 9/5/2014 closing price.

1Q14: Profit after tax increased by 2.5% to 1.46 billion baht (vs. 1Q13). 
EPS decreased by about 3%. There were also more shares because of warrants and if not, EPS would have increased slightly by 0.7% (vs. 1Q13).

Balance Sheet (FY13)
Total Debt/Equity is about 48.26%.
Total Debt/Net Income is about 6.1 times.
Interest Coverage Ratio is about 5.1 times.

Free cash flow is positive at about 832 million baht, with net income of 4.1 billion baht.

Throughout the year, the group paid 493 million baht in cash dividends and 329 million baht in scrip dividend. 

Interest Rate Exposure (FY13)
The group has 16 billion baht of borrowings at fixed rates, and another 7 billion baht at floating rates. 1.5 billion baht of long term borrowings mature in 2014.

P/E is about 23 times based on FY13 earnings and closing price on 9th May 2014.

4 Main Risks
1. Business Disruption
MINT's profitability and revenues are dependent upon consumer discretionary spending and tourist confidence. This business model is affect by external uncontrollable events such as an economic recession, natural disasters and political unrest. The company has diversified its risk by having operations across Southeast Asia, China, Africa, Indian Ocean, India and the Middle East.

2. Competition
The hospitality business is competitive and profits are seasonal. The restaurant business has low barriers to entry. Retail trading is also a brutal business. 
MINT has a diversified product geography of numerous product offerings and it focuses on being among the top in each market.

3. Risks from new investments
The continued political unrest and economic recession in Thailand justifies MINT's strategy of expanding overseas, especially for AEC 2016. However, the next ThaiExpress or brand it acquires may turn out to be a rotten apple instead.

4. Foreign currency risk
The overseas operations are subject to the fluctuation of foreign currencies when the results are consolidated into the financial statements in baht. Although the majority of debt borrowings are based on fixed interest rate, as of FY13, 30% are at floating rates.

MINT turned in a revenue and EPS(undiluted) increase in the first quarter which is very good considering the political unrest and economic recession. It is to be noted that MINT has geographically diversified operations, even within Thailand. Provincial Thailand has also been showing promising growth as Bangkok continues to overheat.

This growth is largely attributed to the overseas hospitality business and Anantara Vacation Club. 

Thai Revenue per available room (RevPar) increased by 8% consolidated, excluding Bangkok it would have increased 17%.

Overseas RevPar increased almost 50% on high double-digit RevPar growth of MINT-owned hotels in the Maldives and Sri Lanka and managed hotels in the UAE, Indonesia and China.

Personally I find the food at ThaiExpress to be of basic taste and mostly inauthentic. However it would be foolish if I use my tastebuds to measure a company for investment! MINT has a stable of well-established brands (especially Anantara) with a good mix of mid to high end in each segment.

Despite the good result, the share price is downtrending, adopting the general trend of the index. Profitable food companies generally trade around 25 P/E, while Hotel/Tourism operators on the domestic exchange are around upwards of 10. 

Disclaimer: I have no vested interests in MINT (as of 1/1/2014) and don't listen to me, I am just a clueless punter. 

May 6, 2014

QAF: Still Fair after 7.8% drop $Q01.SI

QAF is one of those companies I have on my watchlist that I consider to be among one of my dearly-missed boats. I have several of such companies where their share price just blew past me right under my nose. Normally I play hard to get myself, and just tweak my watchlist. However there are some that tempt me to check back every so often.

The 7.8% drop in share price today (5 May 2014) caught my attention. It went XD and lost 7 cents in share price today, from an announced 4 cents dividend. I decided to browse the FY13 annual report and prepared a simple write-up below. All numbers and the image (except the graphs) are taken from QAF's annual reports.

QAF is an investment holding company based in Singapore that was incorporated in 1958. It has operations primarily in Singapore, Malaysia, Philippines and Australia. It is a multi-industry food company with core businesses in bakery, primary production and trading and logistics. Some of their well-known proprietary brands are Gardenia, Farmland and Cowhead. They also have one of Australia's largest pork production operations from farm to fork.


FY13: Revenue has increased by 4% (vs. FY12). The percentage of sales devoted to COGS increased from 59.74% to 60.95% (vs. FY12). 

1Q14: Revenue is down (3%) (vs. 1Q13).

Earnings and Dividends

As the number of outstanding shares keep increasing yearly, I will just mention EPS for the previous year for comparison. 

FY13: EPS decreased about (15%) from 6.60 cents to 5.60 cents (vs. FY12). Dividend per share is unchanged at 5 cents. Dividend yield is about 5.8% (share price 86.5 cents, as at date of announcement of AGM, 9 April 2014).

1Q14: Profit after tax increased by 12% to S$13.5 million (vs. 1Q13).

Balance Sheet (FY13)
Total Debt/Equity is about 18%.
Total Debt/Net Income is about 3 times.
Interest Coverage Ratio is about 12.5 times.

Free cash flow is positive at about S$35.2 million, also slightly higher than net income of S$30.2 million.

Throughout the year, the group paid S$27 million in dividends and repaid about S$6.3 million in short term debt and S$3.5 million in long term debt.

P/E is about 14.8 times based on FY13 earnings and closing price on 5th May 2014.
NAV increased to 75.6 cents for the 1Q2014 (from 72.6 cents FY13).

4 Main Risks
1. Disease and epidemic
Under the QAF umbrella, there are about 384,000 pigs and 1800 dairy cows in their farms based in Australia (Rivalea). There had been several outbreaks in recent years that resulted in mass culls of pigs and farm closures in many Asian countries. However, group is confident in the strict quarantine laws of Australia while being aware of the possible risk of disease epidemics in animal farming. Therefore there are risk management practices in place in the form of operational preventive measures.

2. Competition
The meat market is subject to periods of oversupply. The bread business competes directly against supermarket chains that have their own in-house bread and bakery products that normally compete on low-pricing.

3. Fluctuations in raw material prices
The livestock farming and meat business is subject to volatile production costs which is directly affect by grain prices. The cost of animal feed is affect by grain prices and Rivalea purchases most of its grain at harvest season. Grain prices also affect wheat prices which may increase production costs for the bakery business. In such a scenario, it may also not be feasible for the business to pass on the added costs to the consumer in the form of raising prices.

4. Foreign currency risk
The group operates in Malaysia, Philippines, Australia and thus are exposed to currency translation risk. The group does not hedge its net investments in these countries.

The strong Singapore dollar relative to the currencies of countries QAF operates in cuts both ways. The group enjoyed lower raw materials cost in the Rivalea and bakery businesses due to the higher Singapore dollar exchange rate (Cost of materials -5% for Rivalea in 1Q14). On the other hand, group revenue is impacted due to the translation effect of the higher Singapore dollar exchange rate against the domestic currencies of its businesses even though sales are increasing at the Malaysian, Philippine and Australian businesses.

Gardenia is expanding into the Greater China market with a joint venture and expects to commence production in the third quarter of 2014.

Barring major shocks to the global economy (or swine flu or another AUD plunge etc), the main key to increased profitability in the short term for QAF will be lower raw materials cost. I am not sure why the management expects raw material costs to stabilize this year. I am not an expert on commodities but taking wheat for example; the US wheat production this year is forecast to drop, coupled with the extended hot, dry weather at the wheat farming areas and Ukraine (another major wheat exporter), it must take a really solid crystal ball to predict the volatility of wheat this year. Source

QAF pays a relatively generous (and stable) dividend for a food-related business, and this should count as one merit to be a shareholder.

I am not that optimistic that it is able to replicate its first quarter earnings throughout the rest of the year. If I were to take past earnings (FY12/13) as a guide, the seasonality of its earnings demonstrate 1st/4th quarter earnings to be the strongest for the year. Simply put, if EPS for first quarter 2014 is 2.3 cents, that will probably be the best earnings quarter QAF will have until the fourth quarter. Although I am ashamed to use such a rudimentary way as a measure of earnings, it at least highlights the unstable earnings throughout the year for QAF, and if I were to hazard a conservative estimate for FY14, it would be about 7 cents, unless the Group manages to pull out something spectacular that it was not able to do in FY12 and FY13. 

Action: I would wait till at least the second half of the year to see how earnings play out and not get too carried away by the first quarter. Technical chart-wise it could probably bounce at 81.5/80/78 cents (with no particular timeframe in mind). May is not a good time of the year to expect a high price from the market!

Disclaimer: I have no vested interests in QAF and don't listen to me, I am just a clueless punter. 

May 2, 2014

Macau junket operator disappears with HKD 10Bln

Junkets in Macau are companies that bring in high-rollers from China and Asia to casinos. They extend credit to gamblers and also collects debt on behalf of casinos on a commission basis.

Macau's junket operators are funded by a large pool of investors and the Macau junket industry accounted for nearly $30 billion of Macau's $45 billion gaming revenue last year.

Mr. Huang Shan who skipped town with about $1.3 billion, is just one of several from the junket industry who ran off with debts, according to a senior casino executive. Source

I recall Genting was longing to have more junkets in Singapore during the recent AGM and the director was gushing about how much more revenue could be earned if Singapore had junkets on a larger scale. While junkets don't normally crash and burn like this if there is enough money to be earned by everyone, I do agree with Genting.

Lets leave all the moral discussion on gambling ills for this article. If I understand correctly, there are currently only a handful of small-time junket operators in Singapore that do not contribute significantly to gaming revenues or the number of high-rollers visiting. From Genting's financial numbers last year, it is pretty clear that they are generating decent cashflow and the business is doing well on both gaming and non-gaming fronts. So from this point of view, the casino business can probably go the way of a safe and sustainable model without the need to expand inorganically or to drive gambler traffic aggressively.

On the other hand, if someone high up has the vision for Singapore to grab more market share from Macau, then junkets should be allowed as a tool to drive casino revenues here. The difference is that the regulators could probably scale it down to suit Singapore's size, just like how a small number of companies dominate their respective markets here. Junkets could also (or will certainly) be an additional stream of tax money.

May 1, 2014

Challenger: Recall of power banks

I was alerted to this report that was published yesterday in ST that Challenger is recalling 12000 units of portable power banks due to an overheating problem which may lead to a fire or explosion.

It is recalling the Valore vPower 7800 mAh and 5200 mAh that are sold for S$79.90 and S$59.90 respectively, for a 1-for-1 exchange or refund. Source

Not sure if I am lucky to have not bought a defective product or ''unlucky'' that my model is neither of these two to get me an exchange for a new charger!


The one I am using is kind of ''cheapo'', only 2800mAh, and I bought it at a heavily discounted offer price of about $10+ to $20 when I renewed my Challenger membership last year. It doesn't even have a warranty (not that I know of). In contrast to the two defective models, mine is white, measures (2 x 2 x 10 cm) and looks extremely suggestive and can probably be easily mistaken for something naughty in public.

Besides that, this charger has also got me a pat-down and a bag search at Manchester Airport. Even when the officer determined it to be harmless (Ahh, so its a torchlight!), it was pretty embarassing to take this item out and explain what it was.

However, this charger does its job well and gives me about 80% of a full charge each time I use it when I'm out, and probably has a bit of juice left, although currently due to some fault of mine (or airport security), the ''head'' of this charging stick is detached and is hanging by the wires.