How to fast-track your retirement

Some people dislike working.   They prefer to retire as soon as possible.  This article is for them.  To fast-track something is not easy.  It requires one to take actions that defy conventional wisdom.

First, "Always be a business owner, not a lender".
The easiest way to own a business is to buy shares in the stock market.  If you own a share, it means that you are a business owner.

Businesses earn the highest return.  The median return on equity of Singapore-listed companies is 9%.  If you choose to lend money, fixed deposits give you 1% and risky corporate bonds give you 5%.

You get measly returns from being a lender, so be a business owner.  Sometimes, the risk you take from buying poor-quality corporate bonds is as much as being a business owner.  To retire early, own a business.

Second, "Put 100% of cash you don't need into stocks".
Don't invest in commodities, gold, land-banking, overseas properties, doughnut shops, hipster cafes, fixed deposits, bonds and flavour-of-the-monh unit trusts.

If you do that, your overall portfolio average return will be 2% for 10 years.  $100,000 growing at 2% for 10 years is going to be $122,000.

Instead, putting $100,000 into stocks will net you $216,000 over 10 years at an 8% rate of return. The 8% return is the long-term average of the Singapore stock market.  $122,000 vs $216,000?  You decide.

Third, " Invest only in small capitalisation value stocks".
Small capitalisation means small companies.  Value is short for "value investing".  Value means stocks that have low price-to-earnings rations, low price-to-book rations and high dividend yields.  Study after study has demonstrated that they give the best returns over the long term.

If you want to achieve returns of 10% or more per annum, buy small capitalisation value stocks.

Fourth, "Be massively diversified.   Own at least 100 stocks in different countries and industries".
Most investors have only 10 to 15 stocks.  If you have 10 to 15 stocks, you will form an emotional attachment with your stocks.   If one of them was sick, you would not be able to sleep at night.  When you have an emotional bond, you will make mistakes - such as not cutting losses when something is evidently wrong and holding on to your winners till they become losers.

Instead, have at least 100.  Don't just invest in Singapore stocks.  Go regional or even global.  Invest in Hong Kong, China, Thailand, Korea and so on.   Go to the country that is having a cheap sale in stocks.

Treat your stocks like a farmer that has 100 chickens.  When they are fattened, slaughter them and bring them to the market.  Do not ever give a name to your chickens, or stocks: they are not your pets.

Fifth, "To master risk, change the way you think about risk".
When you see your share price drop, it does not mean that you participated in a risky activity and that you are now paying the price.  It just means that some dummy who does not understand the true value of the stock sold it, and someone smarter on the other side of the transaction who understands fair value bought it.   The seller probably sold it because he is a nervous chap and he is very worried about the Donald, May, North Korea, Global Warming and the Monster under his bed.

Sixth, "The Way to Wealth: Value Investing".
Value investing means buying a stock for 50 cents when its true value is one dollar.  Why would someone sell to you for 50 cents?  Either they are mad, scared or both.  Humans go berserk from time to time.  When that happens, relieve their anxiety and pay them 50 cents for a dollar's worth of stock.

Seventh, "Penny pinch.  Use that money to buy stocks".
You don't need that German car.  Buy stocks instead.


Source:  Aggregate Asset Management, The Edge Singapore, June 26, 2017

Investing is a marathon, not a 100m sprint

Extracted from Tong's value investing portfolio (The Edge Malaysia, May 22, 2017)

It's easy to make money when markets are rallying.  If you had bought some stocks in the past few months, chances are you would have made money too.

Make no mistake though, just as the past few years have been very difficult for investors at large, this rally too will eventually come to an end.

I started this portfolio (refer to Tong's Value Investing portfolio) back in October 2014, a rather turbulent time.   Three months later, by end-2014, the FBM KLCI index had fallen 3.7%.  The benchmark index went on to lose another 3.9% in 2015 and yet another 3% in 2016.

I'll wager that for many investors, this hasn't been a rewarding period.  Yet, others may have chosen to stay on the sidelines.  That would've been a mistake.

Cash generates woeful returns.  Money in the bank earns negative returns, once you take into account, the real inflation rate.

Investing is the best way to create wealth.  But it's also a matter of how you do it.

From my years of experience, the wisest investment strategy is not about making as much money as possible in the short term.

It's about how consistently you make money over a very long period of time.  Importantly, that includes making money even in the worst of times.

On top of that, you need to minimise the risk or volatility of your portfolio.

Last but not least, you harness the power of "compounding" - the snowball effect - by reinvesting profits and earning returns on them over long periods of time.

Even if you make 10% returns annually (or reinvest all your gaints) consistently, you will double your capital in 7 years.   This is a mathematical certainly.

Remember, compounding works on the big assumption that you do not go broke during the time frame, which you will if your aim is to maximise short-term profits.

For example, if you want to make a 50% gain, then you must take on a lot more risks.   As we all know, risks and returns are two sides of the same coin.

Say you do make a 50% gain in the first year on RM100,000 capital, you will have RM150,000.   But if you lose 50% in the second year, you're down to only RM75,000.   You've actually lost part of your initial capital, which means now you have less to invest and therefore need even higher returns (and higher risks) to make up for lost ground.   You can keep doing the math.

Roll the dice enough times and you'll soon find yourself on the path to financial ruin!

As I said last week, there is no certainty in investments.   We clearly cannot always be right.   We will inevitably miss opportunities and we will get our timing wrong.   We will make losses on some investments.

The keys to profitable investing are consistency, not suffering huge losses and minimising risks.

------------------------------------------------------------------------------------------------
Remarks: A tribute to Tong.  His portfolio is up a hefty 60.1% in under 3 years.

When a stock that you buy doesn't rise

It could be the case that a stock that you buy doesn't rise despite you being dead sure that it will.   Why is this so?

I read an article (dated 3 April 2017) in the Edge Malaysia by Datuk Tong Kooi Ong in his value investing portfolio which was very enlightening.    The important extracts are listed below:

     "Buying shares is not an exact science.   Usually, in the long term, share prices will reflect the intrinsic value, that is, the sustainable cash-generating ability of its operations. 

      Sometimes though, as outsiders, we must also acknowlege the limitations of our analysis and knowledge.   There could be reasons why share prices persistently underperform, even after the company delivers in terms of earnings.   Perhaps there are reasons that could affect business operations in the future (that are not yet apparent), issues of personalities, and so on.

      Whatever the reason, as an investor, we should be patient - but not indefinitely so."


Very wise words indeed.

20 Stocks Offering Value Amidst Uncertainties

Shares Investments has highlighted 20 companies (18 listed on SGX and 2 listed on Bursa) that offer value amidst uncertainties.

The companies are City Developments, Global Logistics Properties, Innovalues, 800 Super, SATS, Fischer Tech, Cityneon Holdings, ISOTeam, Courts Asia, MMC Corporation, LHN, Hupsteel, IQ Group, BHG Reit, PEC, Yoma Strategic Holdings, Great Eastern Holdings, Sapphire Corporation, Global Invacom and Singapore Medical Group.

The full reports are attached below:

English Version (5.5 MB +)

Chinese Version (5.5 MB +)

Cash-Rich Companies listed on SGX

The Edge Singapore carried an article in its latest copy for the week 20 March 2017 entitled "Does your company have too much cash?".

According to the article, at least 100 of the 754 companies listed in Singapore have cash holdings more than half their market capitalisations.

Companies need to strike a balance between holding too much and too little cash.  Holding more cash enables companies to weather unexpected storms better or take advantage of opportunities in the market.   The downside is that the cash is not being deployed to more potentially productive uses.

Source: The Edge Singapore, March 20, 2017/Bloomberg

Let This be a Lesson, Singapore

Source; The Edge Financial Daily, 2 March 2017

Bloomberg Link
(click above)

Chinese New Year of the Rooster Horoscopes - Year 2017

Source: The Edge Malaysia, 30 Jan 2017 

8 Money Personality Types - Which do you belong to?

1.    The Innocent - not wanting to know what is going on

2.    The Victim - blames his/her financial circumstances on external factors

3.    The Warrior - takes charges of his/her finances

4.    The Martyr - too busy taking care of others' needs while neglecting his/her own

5.    The Fool - looks for windfalls and financial shortcuts

6.    The Creator/Artist - has a love/hate relationship with money

7.    The Tyrant - uses money to manipulate and control people

8.    The Magician - knows how to transform and manifest his financial reality

          - by Gunasegaran Krishnan, founder of Wealth Street Sdn Bhd (an independent fiancial advisory firm licensed by the Securities Commission Malaysia)

Analysts' Stock Picks for 2017 (Singapore Stocks)

Based on an article from The Edge Singapore, 26 December 2016.

Singapore Stock Picks for 2017

According to a Maybank Kim Eng research report today (13 December 2016), the firm views the current economic outlook as mediocre to poor for all four factors deemed important for market performance:

1.       Economic growth is sluggish,

2.       Index valuations uncompelling,

3.       Earnings recovery expectations weak with downside risk,

4.       On the politics & policy front, rising risks of protectionism in the west, possible cooling-off in China relations plus neighbouring countries’ measures should stem capital outflow.

Against this backdrop,  MKE prefers a strategy of capital preservation over growth. 

The top stock picks for 2017 by MKE are:

1.       CapitaLand Commercial Trust

2.       Keppel REIT

3.       Venture Corporation

4.       Raffles Medical Group

5.       United Overseas Land

6.       Bumitama Agri

7.       Jumbo Group

8.       Ezion

ST Engineering and DBS are also flagged as two stocks best leveraged to USD strength but valuations are not compelling.

Stocks NOT liked by MKE include:

1.       OCBC

2.       Genting Singapore

3.       Keppel Corp

4.       MobileOne

which MKE believes the market is currently underestimating and mispricing business risk.

A Christmas Quiz Question - Is this Singapore or Hong Kong?

Getting into the mood for Christmas, here is a quiz question for you:

The 2 screenshots were taken today, 5 December 2016, using my mobile phone.

These were the top volume counters for the day:

Screenshot 1 - end of day -  Which market was this?   Hong Kong or Singapore?
Screenshot 2 - 14:05 hrs - Which market was this?   Hong Kong or Singapore?

Scroll down for the answer:

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*


Answer:

Screenshot 1 : Hong Kong Stock Exchange  (HKEX)
Screenshot 2 : Singapore Exchange (SGX)!


Screenshot 2 pretty much sums up the pathetic state of our Singapore stock market right now.   It is not even penny stocks that are in the top volume list.   Rather covered warrants on the Hang Seng Index (HK Exchange)??!!

SGX had better wake up.   Otherwise we'll become Rip Van Winkle in the near future.

Rip_Van_Winkle

10 Singapore Stocks for 2017 (1H)

1.   Sheng Siong Group
2.   Global Logistics Properties (GLP)
3.   Raffles Medical Group
4.   SingTel 
5.   CapitaLand
6.   OUE
7.   Ascendas REIT
8.   Keppel DC REIT
9.   Frasers Centrepoint Trust (FCT)
10.   Frasers Logistics & Industrial Trust (FLT) 

Above recommendations by OCBC Research.


For reasons for recommendations, see attached link below:

10 stock picks to guide you through a lacklustre 1H17 (Singapore Market Report)

ISR Capital - SGX suspends trading to "safeguard market interest"

Citing the need to “safeguard the interest of the market”, the Singapore Exchange has suspended the trading of ISR Capital shares with immediate effect.

In a filing released at 10.04pm on Sunday evening, SGX says there are “circumstances that prevent trading in the shares of this company on an informed basis”.

“We are reviewing the trading activities in the meantime,” says SGX.

“The suspension will be lifted only when SGX is satisfied that the company’s shares can be traded on a fair, orderly and transparent basis,” it adds.


Full Article (Link)

Source: Singapore Market Report

ISR Capital - Stock down 55% in one day, SGX issues 4th query in 6 months, Trading Halted

It was a disaster waiting to happen.... we didn't know when the price would collapse but it was only a matter of time.   I highlighted my concerns in another blog post just 2 months ago.

ISR Capital - Like Moths to an Open Flame, this will likely end up in tears again


ISR Capital has been halted from trading today, 24 November 2016.   The stock is down a massive 55% in one day and SGX has raised a 4th query in 6 months to the company.

ISR Capital will be halted from trading until 28 November 2016 pending a response owing to SGX on a valuation report issued by Al Maynard & Associates Pty Ltd.

Full credit to the SGX for proactively engaging the company with relevant queries to address potential areas of concern.

Also credit to the Edge Singapore for reporting on ISR Capital many months ago when the deal was first structured.

The Edge Singapore and its sister publication, The Edge Malaysia, are excellent publications that any serious investor should be reading regularly.   The articles are reported in a unbiased and informative manner.   Journalism and reporting of the highest quality and standard!

Uncovering Gems In An Undervalued Malaysian Stock Market 2016

A complimentary report brought to everyone by:
--------------------------------------------------------------------------------------------------------------------

Thank you Bursa Malaysia & Shares Investment!

Links Below:

English Version (8 MB+)

Chinese Version (8 MB+)

Singapore Bonds - More Trouble (KrisEnergy Ltd, Singapore)

We add KrisEnergy to the list of troubled bonds.

Based on latest news reports, the company's efforts to restructure its bonds are facing problems.

Some noteholders are demanding hgher coupon rates and a shorter extension period,
They have also asked KrisEnery to adopt a more restrained and disciplined capital expenditure programme.

A group of noteholders have issued an open letter to the firm's noteholders and stakeholders saying that it intends to vote no to what it deems an "inequitable offer" while acknowledging the efforts of KrisEnergy and its main shareholder Keppel Corporation to help the firm manoeuvre through a difficult market environment, with the help of DBS Bank.

Rickmers Maritime - Trading suspended, flags on-going concern risk

And so it comes to this sad state.

Rickmers played a risky game of poker with its bondholders with one gambit round of SHOWHAND.    It offered its bondholders very onerous terms for a "haircut" otherwise there was a high possibility that they would no longer be able to maintain their coupon payments.  

However the terms were so onerous that bondholders baulked and called their bluff.

Nov 15, 5.45 pm - The Business Times Singapore reports that the trustee-manager of Rickmers is unable to pay a S$4.26 million interest for its bonds due on 15 Nov 2016.   If it fails to do so within the next five business days from today, an "event of default"would occur, which would trigger cross-defaults and/or cross-acceleration clauses in other loan agreements.

Trading in Rickmers Maritime will be suspended until there is further clarity from bondholders who are scheduled to vote for a restructuring of their bond obligations.   This is expected between 23 November and 21 December 2016.   The earlier meeting of bondholders was unable to take place due to an insufficient quorum.

If  only the Management had treated their bondholders with more respect and accorded them with more acceptable terms for restructuring, we may not have ended up with today's sad state of affairs.

Sleepless in Singapore

A light-hearted look at sleep-deprived Singapore.  

Singaporean's average only 6.24 hours of sleep a day!    

Sleepless in Singapore (Article Link)

Source:  The Star Malaysia, 6 November 2016

What's the difference between Deepavali and Diwali?

We visited our Indian neighbours yesterday to wish them Happy Deepavali and to present them with some food and goodies to celebrate the day.   During the conversation that we had, our neighbours referred to Deepavali as Diwali constantly and when I returned home, I finally decided to google for an answer to find out a nagging question which I've had for the past few years: -

What's the difference between the choice of the two words: "Deepavali" vs "Diwali"?

The following website:

http://www.deepavali.net/

seems to provide a very good answer.

Here are the key points extracted from the website:

Source: www.deepavali.net

Deepavali (also: Depawali, Dipavali, Dewali, Diwali, Divali, Dipotsavi, Dipapratipad ) marks the beginning of the Hindu New Year according to the Lunar Calendar. It literally translated means 'Row of Lights' (from Sanskrit: dipa = lamp / awali = row, line). It celebrates the victory of Goodness over Evil and Light over Darkness - it ushers in the new year. Especially for this event people are cleaning their houses and wear new clothes. Deepavali is a 4 day festival as Deepavali, Lakshmi Puja, Kartika Shuddha Padwa and Yama Dvitiya. There are many different names for the days of Deepavali (or Diwali) in different regions of India (South & North India, East & West India) and in the different languages spoken in that regions (i.e. Hindi, Urdu, Telugu, Tamil, Gujarati, Bengali). During Deepavali people pray to Lakshmi, Goddess of wealth, light, prosperity and wisdom, but also to Ganesha, the 'Remover of Obstacles' and the 'Lord of Beginnings'.

Deepavali celebrations take place in many countries in the world. On the first day of the Deepavali festival people pray and having a special breakfast made of many different foods. The Hindu Goddess Lakshmi's statue and images are carried through the streets in processions. There are various legends and stories associated with the Deepavali festival. The story of Bali, Emergence of Laxmi, Krishna Narakasur Fight, Victory of Rama over Ravana and many more. Dipa Lights (also called Diwali Diyas, Kandils, Ghee Lamps or Parvati Ganesha Lamps) - made of clay, fueled with Oil from Coconuts, Mustard or Ghee (clarified butter), the wick made of cotton wool - are placed outside of houses, on floors and doorways. During Deepavali festival, doorways are hung with torans of mango leaves and marigolds. Deepavali Melas are being enjoyed by Hindus, Sikhs, Jains & Buddhists alike. On the day of Deepavali people exchange gifts, bursting firecrackers, lighting fireworks, colourful sparklers & bonfires and having festive meals. Diwali Melas (fairs) are held throughout India and the celebrations abroad. The Indian Festival of Lights takes place after the monsoon season has finished and the weather is nice and pleasant again.

Wishing Happy Deepavali to everyone! Deepavali Valthukkal!! Shubh Diwali!!

What's the difference between Deepavali vs. Diwali ?
	DEEPAVALI	DIWALI
Origin	Deepavali is the ORIGINAL NAME from Sanskrit Dīpāvalī (दीपावली) meaning "Row of Lamps" or "Spreading of Light".	Hindi name, a contraction of "Deepavali". Could have emerged to simplify pronunciation under the British rule (1757-1947).
Regional Significance	Celebrated in South-India in the states: Tamil Nadu, Kerala, Karnataka, Goa, Andhra Pradesh Countries and Regions with a significant population of Indians from the southern Indian states (Tamils) such as: Malaysia, Singapore, Sri Lanka/Ceylon, Fiji, South Africa, Mauritius, Réunion, Martinique & Guadeloupe	Celebrated in North-India in the states: Gujarat, Madhya Pradesh, Chhattisgarh, Orissa, Maharashtra, Rajasthan, Uttar Pradesh, Haryana, Punjab, Uttarakhand, Himachal Pradesh, Jammu & Kashmir, Bihar, Jharkhand, West Bengal, Sikkim, Meghalaya, Assam, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura Countries with a significant Indian population mainly from North-India such as: USA, Canada, United Kingdom, Guyana, Trinidad and Tobago and others (see below)
Date Calculation	Falls on Ashvina Krishna Chaturdasi (the lunar day before the new moon). The exact date is calculated based on the last 90 minutes before sunrise (Arunodaya). Deepavali involves bathing before sunrise. Geographic location: Chennai (Tamil Nadu)	Falls on the following lunar day on Ashvina Amavasya (lunar day of new moon). The date is calculated based on extended Pradosha (a few hours after sunset). Observed by displaying diyas, lanterns and firecrackers. Geographic location: Allahabad (Uttar Pradesh)
	The 2 holidays are defined to occur on 2 separate lunar days. In the Gregorian (Western) Calendar, Deepavali & Diwali can fall on the same calendar day when both periods (see above) of about 16 hours in total happen to be within the 24 hours of a single civil/Gregorian day. This means that the date will fall in about 2/3 of cases (years) on the same Gregorian day. (Many thanks to Olivier Beltrami for his expert advice on this !)
Festival Days & Spiritual Differences	Deepavali is a 4 day festival Day 1: Deepavali (Naraka Chaturdasi) Commemorates the victory of Lord Krishna over the demon Naraka. People taking a bath in the early morning before sunrise while the stars are still shining in the sky. Day 2: Lakshmi Puja Goddess Lakshmi emerged from Kshira Sagara (Ocean of Milk). Lakshmi Pooja is performed on this day. Day 3: Bali Padyami/Vikram Samvat/Kartika Shuddha Padwa Celebrates the victory of god Vishnu in his dwarf incarnation Vamana over the daemon king Bali. Honours Bali's return to earth for his devotion to the Lord and for his noble deeds to his people. First day of the Hindu month Kartika. Day 4: Yama Dvitiya Yama (God of Death) had a feast with his sister Yami. She put an auspicious tilak mark on his forehead for his well-being. On this day sisters pray for well-being of their brothers. In return brothers giving gifts to their sisters.	Diwali is a 5 day festival Day 1: Dhanteras Commemorates the birth of Dhanvantari (the physician of the Gods). Dhan translates to wealth. Goddess Lakshmi is being worshiped for prosperity and well-being. Many Indian businesses start their accounting year on this day. Day 2: Choti Diwali (Kali Chaudas) Also known as Small Diwali. Daemon Narakasura was killed by Krishna. Poojas for Lakshmi and Rama. Day 3: Diwali & Lakshmi Puja Commemorates the return of Lord Rama (King of Ayodhya) to his hometown from 14 years of exile in the forest, after defeating the evil daemon king Ravana of Lanka. Goddess Lakshmi emerged from Kshira Sagara (Ocean of Milk). Lakshmi Pooja is performed on this day. Day 4: Govardhan Puja (Annakoot) Celebrates the victory of Krishna over Indra, the deity of thunder and rain, by lifting Govardhana Hill with his little finger to save people from the floods. This day is also known as Annakoot (mountain of food). Day 5: Bhai Dhooj Sisters pray for well-being of their brothers and put a mark on their foreheads. Brothers give gifts to their sisters in return.

             Corrections? Additions? Please let us know. Thank you!

Deepavali 2016 Calendar

When is Deepavali 2016 ?

Saturday, 29 October, 2016 - Deepavali (Naraka Chaturdasi)
Sunday, 30 October, 2016 - Diwali (Lakshmi Puja)
Monday, 31 October, 2016 - Bali Padyami / Vikram Samvat (Kartika Shuddha Padwa)
Tuesday, 01 November, 2016 - Yama Dvitiya / Bhai Duj


Note: Deepavali is celebrated 1 day before Diwali in 2016

Singapore Bonds - More trouble (ASL Marine, Ezra Holdings)

More Bond trouble ahead:

1. ASL Marine is proposing to raise $25 million via a rights issue to repay S$100 million worth of  notes due in March 2017.

2. Ezra Holdings will seek bondholders’ approval in a meeting planned for 9 November 2016 to loosen covenants on US$150 million bonds maturing in 2018.


Based on a report by the Straits Times yesterday, 26 October 2016, an informal meeting held by Ezra highlighted that Ezra’s bond holders were “calm and positive” at the meeting.

Extracted from the SGX website is the presentation slides made at the briefing (see link):

Ezra - Informal meeting with Bond Holders


Personally, I am surprised at the cavalier attitude adopted by the bond holders if what the Straits Times’ sensing of the mood of the meeting is correct.      It is a lot of money at stake that bond holders are making a decision on and do they really understand what rights and obligations they are waiving off?    It cites that bond holders were happy that Ezra had delivered on a $3.66 million coupon on Monday and they could “feel Management’s sincerity”.   For Christ’s sake, the coupon payment is due to you! so this is nothing to be thankful to them about.   It is why you bought the bond in the first place anyway, isn’t it?   Otherwise, you would be buying the company's shares and be shareholders instead.  Not bond holders.

Think carefully before you waive away any rights and obligations that you have.   To cite an analogy, this is like cases that we read about in the newspapers whereby heartless children encourage their parents to sell off their existing premises and stay with them so that they can part-finance their purchase of a new apartment.    Sometime later, they kick their parents out of their homes when they cannot get along with them.
 
Business Times’ reporting of the event was far more balanced and I commend them for a more objective view of the meeting.   Of course, I was not privy to the details as I am not a bondholder, so only those present would be able to tell what the mood of the meeting was.

Do read through your documents carefully.   Even with a post-graduate degree in Finance, I had to read them three times before I had a better understanding of what you are giving up your rights on.

All the best to you (Ezra bond holders) for the Nov 9 meeting.

Sincere thoughts and wishes,
Green Ninja.

Swissco's trading status is now reflected as "Suspended"

As of this morning 12 Oct 2016, Swissco's trading status has been updated and reflected as "Suspended" from the earlier "Halted".

Under the circumstances, this can only mean bad news for bondholders and now also shareholders.

The reasons for the trading suspension are two-fold:

1.   In view of the debt structuring plan and,
2.   On-going lawsuits - see attached link below:

On-going Lawsuits (link)


Will bondholders and shareholders be able to get any money back?

The last traded price was 5.2 cents.   I'm afraid it will no longer even be 5.2 cents after it resumes trading again.

Singapore Bonds - Like Dominoes, they are starting to fall

In late 2015, Trikomsel and Pacific Andes Resources Development failed to make payments on three notes. 

Like dominoes, other companies in the Oil and Gas sector are starting to fall:

1.  Swiber
 Defaulted on outstanding bonds for semi-annual payment in the $150 million series 001 Trust Certificates, which carry a coupon rate of 6.5 per cent and are due for maturity in August 2018. Legal claims against Swiber have been piling up, rising to US$231.4 million as of 15 Sep 2016. Swiber's application for judicial management was approved by the High Court on 6 October 2016.

2,  Rickmers Maritime

Asking creditors for leniency on about US$253 million (S$344.8 million) of debt.   It won’t be able to repay US$179.7 million of bonds due in March 2017 and the interest and principal on S$100 million of notes due in May 2017.    An extraordinary general meeting (EGM) on 31 Oct 2016 will be held to seek approval for a debt-to-equity proposal, which is highly unpopular among bondholders.

3.  Perisai Petroleum Teknologi

 Perisai Petroleum Teknologi - Ezra Holdings’ associate company Perisai Petroleum Teknologi was unable to win the 75 per cent note-holder approval needed to restructure its S$125mil (RM377mil) medium-term notes (MTN).  An indicative offer of financing from a financial institution has been received, following the rejection of Perisai’s initial restructuring plan by bondholders for its MTN.

4.   Swissco Holdings 
Swissco – Provided the market with a nasty surprise by proposing to restructure its bonds worth US$100 million including a S$2.85 million coupon payment due on 6 Oct 2016.   Firm’s cash flow situation could be worse than expected.

For Swissco, it was not so long ago (less than 3 months in fact!), when they came out to imply that there were different from Swiber, when the latter announced that they planned to go into voluntary liquidation.   In fact, they even issued a press release to say that they were in a different sub-sector.     See attached. 

Swissco Announcement 28 July 2016

 One really wonders how much we can trust our companies….   : (

Perisai Bonds on shaky ground - Ezra may be in possible jeopardy if firm fails to redeem its bonds

Source: Straits Times 30 Sep 2016


A second Singapore-dollar bond default from the hard-hit oil and gas industry could be on the cards.

Perisai Petroleum Technologi, a company listed on KLSE, and its bond holders are struggling to agree on $125 million worth of notes due to mature on next Monday.

Ezra Holdings, with a 22.5 per cent stake in Perisai via two units, could find itself in jeopardy too should the firm fail to redeem its bonds.   The two firms are linked through a US$43 million (S$59 million) put option.

Perisai is seeking note holders' agreement to waive the payment of note principal and interest due on 3 Oct 2016 and also wants to postpone the maturity date by four months to 3 Feb 2017.   Perisai is operating "under extremely tight financial conditions" as business has been hurt by weak crude prices and slow economic growth.

(For full article and details - see Page C1 of Straits Times).

http://www.straitstimes.com/business/companies-markets/perisai-bonds-on-shaky-ground

Article Link

You're Not as Rich as You Think (by Satyajit Das)

Source: (Bloomberg)

Article Link


You're Not as Rich as You Think
By Satyajit Das


The idea that the world is awash in savings -- one factor driving the theory of secular stagnation -- is, on the surface, a persuasive one. Too bad it may not be true.

Yes, the postwar generation is wealthier than any before it. But the ultimate value of any investment depends upon being able to convert it into cash and thus generate purchasing power. In fact, the world's accumulated wealth -- around $250 trillion, according to Credit Suisse’s Global Wealth Report -- is almost certainly incapable of realization at its paper value. The headline number thus vastly overstates the supposed savings glut.

Most of these savings are held in two forms: real estate, primarily principal residences, and retirement portfolios that are invested in stocks and bonds.

Both are rising in value. A combination of population growth, higher incomes, increased access to credit, lower rates and, in some cases, limited housing stock have driven up home prices; those who got in early have done especially well. Meanwhile, increased earnings and dividends, driven by economic growth and inflation, have boosted equity values. So have loose monetary policies designed to counteract the Great Recession since 2009.

Yet the appreciating value of one’s own home doesn't automatically translate into purchasing power. A primary residence produces no income. Indeed, maintenance costs, utility bills and property taxes -- which often rise along with home prices -- mean that houses are cash-flow negative.


Secular Stagnation

To monetize one's gains would require borrowing against the value of the property. Those loans cost money to service and expose owners to fluctuations in property values. The property can always be sold, of course. But much of the profit is likely to be eaten up by transaction and relocation costs -- not to mention the cost of a new home, which will also have risen in value.
High property prices depend on there being enough potential buyers who can afford the increasingly large mortgages that have helped boost real estate values over the last half a century. Their number may be shrinking: Stagnant incomes, the decline in secure, long-term employment and rise in contracting jobs all undermine the appetite and ability to borrow. Demographic changes and new barriers to immigration will shrink the size of populations as a whole. Similar considerations apply to real estate investment.

Share prices, on the other hand, represent future rather than current earnings streams. Low interest rates, which have to rise eventually, have artificially increased the discounted value of these cash flows. Much of the gains merely reflect higher PE multiples, not higher revenues and earnings. Slower growth and lower inflation mean future income streams may be weaker.
In recent years, equity valuations have also benefited from the rising share of national income captured by corporate profits, which may be unsustainable. Debt-funded share buybacks and corporate activity that boosts valuations -- including mergers -- may slow. Companies can't repurchase more than a certain level of outstanding shares if they want to maintain their stock-exchange listing and trading liquidity. Mergers eventually may run up against competition concerns.

Fixed-income instruments don't necessarily offer a safe haven. The credit quality of government and corporate bonds has declined. Regulatory changes mean that bank-issued bonds may be written down in cases of financial distress. With investors having assumed more risk to compensate for falling returns, they face increasingly uncertain returns on capital.

An important factor is changing funds flows. Rising wealth, in part supported by forced or tax-incentivized pension savings, created strong markets for financial assets in the postwar era. Now, many aging investors are set to draw down on those savings at the same time to fund their retirement. Given fraying safety nets across the developed world, those withdrawals could well be large -- indeed, greater than new inflows. That will reduce the funds available for investment, as well as demand for property, equities, bonds and other assets.

All this could set off a vicious cycle. Lower asset prices will shrink tax revenues. At the same time, demand for essential services will increase as many find themselves unable to finance their own needs. Fiscal positions will take a hit, resulting in lower government spending and higher taxes. That will only accelerate disinvestment.

The inability to convert investment into cash at current valuations means that individuals may be a lot less wealthy than they assume. They may have to consume less now in order to ensure sufficient cash for future needs, reducing economic activity. Lower levels of wealth also limit policy options for governments and central banks, which rely on mobilizing savings to boost growth and manage high debt levels.

That's perhaps the final irony. Whether real savings are higher or lower than currently believed, the result may be the same: a global economy mired in a prolonged period of stagnation.

-------------------------------------------------------------------------------------------------------------------
Satyajit Das is a former banker, whom Bloomberg named one of the world's 50 most influential financial figures in 2014. His latest book is "A Banquet of Consequences" (published in North America and India as "The Age of Stagnation"). He is also the author of "Extreme Money" and "Traders, Guns & Money."

ISR Capital - Like Moths to an Open Flame, this will likely end up in tears again

Moths are attracted to light at night, even if that light is from an
open flame.  If one flies too close by mistake, the moth gets burnt!

     ISR Capital's price surge today brings its PE to more than 500 times!   Astronomical by any standards of measurement.   Like moths to an open flame, this is likely to end up in tears again.   Is this going to be another Blumont even before the investigations are over?

Trading on momentum is extremely risky, so beware.   Has SGX raised any query yet?    One was done on 14 September and they'd better raise another one soon.

Holders of the death spiral convertible bonds will have having a field day in this rally and making a killing.   Buyers may likely be taking over their holdings and stock.

Should one "short" this stock?   Probably no.  It is far too risky likewise, not knowing how tightly the stock is held, or if interested parties will push the share price even higher.

Buyers beware!

V Holdings Limited (Part 2) - The Berlin Wall Crumbles (A Fictional Story)

The Berlin Wall (German: Berliner Mauer) was a barrier that divided Berlin (West and East Germany) from 1961 to 1989. Constructed by the German Democratic Republic (GDR, East Germany), starting on 13 August 1961, the Wall completely cut off (by land) West Berlin from surrounding East Germany and from East Berlin until government officials opened it in November 1989.   The barrier included guard towers placed along large concrete walls, which circumscribed a wide area (later known as the "death strip") that contained anti-vehicle trenches, "fakir beds" and other defenses. The Wall served to prevent the massive emigration and defection that had marked East Germany and the communist Eastern Bloc during the post-World War II period.   (Source: Wikipedia)

In the game of chess, a defence set-up known as the Berlin Defence became known as the Berlin Wall after it was used to devastating effect by challenger, Vladimir Kramnik in his World Chess Championship match against Garry Kasparov, in which the former won.    The Berlin Defence was so solid that the world champion, Kasparov could find no way through to break-up Kramnik's defences in his games as Black.


Now back to V Holdings Limited.   To support our proposed rights issue, we erected a Berlin Wall at the rights issue price.    Millions of shares on the "buy side" at the rights issue price to support the share price but the selling wave that came was swift and fierce.   Damn... Who are the sellers?!  Our Berlin Wall has crumbled.    What do we do now?  

Time to reload and gather more fire-power.    Need to nudge the share price back up above the rights issue price again.   : (

-----------------------------
Author's Note: This is a fictitious story which was inspired by a dream that the author had in which he was the Financial Controller of a company.

Retail Pump Prices in Selected Countries (Singapore and Malaysia included)

Source:  The Star, 12 September 2016

   Weblink for more details:

V Holdings Limited - The Emperor has No Clothes (A Fictional Story)

In Han Christian Andersen's tale of "The Emperor's New Clothes", the short tale by Andersen tells of two weavers who promise an emperor a new suit of clothes that is invisible to those who are unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, no one dares to say that they don't see any suit of clothes until a child cries out, "But he isn't wearing anything at all!".   (Source: Wikipedia)


Your company's stock price is under tremendous pressure due to adverse events happening from outside and within the company.     You need to "ask for more money from your shareholders"  bolster the financial foundation of the company.    So, how to you best convince your minority shareholders to part with their money,  further be involved in the equity of the Company, and allow ...(the Company) to be less dependent on external sources of funding?

Call for a deeply discounted rights issue and your share price will be bashed down further beyond recognition.    No, No, this will not work.

So, why not think out of the box?   Come up with a proposal so unthinkable that shareholders start to doubt themselves instead of the company?    Let them think that it is them who do not understand the merits of a rights issue that is offered to them at a PREMIUM rather than a discount!    Ok... to sweeten the deal, we'll offer them some free warrants which will given to them if they subscribe to the rights issue.

Meanwhile we'd better start pushing up the share price together with our buddies and interested parties so that it rises above the rights issue price.  And make sure as hell that the share price stays that way until the rights issue is over so that minority shareholders will think that this is a good deal that they are getting themselves into.

Will this plan work?   Maybe, maybe not.   But we've got no choice, so we'll have to give it a try.   Even if the rights issue is undersubscribed, we'll get some much-needed funds into our coffers.

Nothing ventured, nothing gained.    "Forture favours the bold" - don't they say?    Unless someone is smart, brave, stupid enough to say:  "Look Ma... the Emperor has No Clothes!"

----------------------
Author's remarks:  This is a fictitious story which was inspired by a dream that the author had in which he was the Financial Controller of a company.

10 O&M (Offshore and Marine) stocks that could be in financial hot water

1.    Swiber Holdings
2.    Ezra Holdings
3.    Swissco
4.    Ausgroup
5.    KS Energy
6.    RH Petrogas
7.    EMAS Offshore
8.    Nam Cheong
9.    Mencast
10.  Loyz Energy

Not in any order of hierarchy, the above 10 stocks were highlighted by UOB Kay Hian in a research report as “facing significant financial concerns”.

The Singapore market report featuring this news is attached in the link below:

Singapore Market report on 10 O&M stocks

UOB Kay Hian is turning negative on the offshore and marine (O&M) sector, downgrading its rating to “underweight” on mounting liquidity pressure on the sector amid a prolonged downturn.

Look at who has been supporting Procurri's share price! (ALERT!)

Look at who has been supporting Procurri's share price since its disastrous IPO debut!

It's none other than Mummy (Declout) herself!

Based on SGX's company announcements and disclosures by companies, Declout increased its holdings in Procurri to 47.3% from 46.5% through an open market purchase of 2 million shares for $1.1million, or an average of $0.525 per share.

See link below:
Declout increases stake in Procurri


We now have a possible explanation on why the (Procurri's) share price collapsed in the final hour of trading.   "Mummy" probably gave up on the defence of the "daughter's"  share price in the late afternoon of Day 1.

Declout's purchase is clearly illogical and borders on madness!   Listing the daughter company (Procurri) and then buying back the shares on the very first day??!!     Does Declout owe her shareholders an explanation on this?

Doesn't it have new businesses to fund?

Is there a better way for Declout to use its available funds?

So, be careful of yesterday's rebound on Day 2.  It could be none other than a major shareholder supporting her own daugher's share price.   In the short term, trade carefully!