Sunday, June 18, 2017

My first Father's day

Today is my first Father's day. It's usually a quiet event, unlike Mother's day, but I like it because it's a quiet event. I don't need fancy roses or wild celebration or chocolate cakes; just a nod, an appreciation and a pat on the back is good enough. It's a team effort, where the glory is not for any individual parent but for the entire family, together as one.

I rehashed this old post, which I still think is very meaningful. Perhaps now, as a newly minted father, it's even more meaningful. I still get touched reading this. Happy father's day to all the daddies who might be earning the money for the family, or the chores they do to take care of the family.

Enjoy :)




My Father
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When I was a kid at 5, I never liked my father. He wasn't there when I needed him, to teach me how to bike. Each night I want a kiss from him, before tucking me to bed. Wasn't there to comfort me, as I cry myself in bed. When I grow up as a man, I don't want to be like him.


When I was a teen at 15, I seldom see my father. He was sleeping when I leave at dawn, at work when I sleep at night. Two persons with the same surname, a stranger inside my home. When he took leave from work, stayed at home to rest, he'll often yell and shout at me. His work can't even earn enough, to buy the coolest gadgets, or bring me to exotic countries, that my friends had been since six.


Teenage years was over, and I just turned 25, but when I think about my father, I still hate him very much. When I graduated I didn't invite him - don't want others to know. I'm ashamed that he will arrive, with the smell and sweat of his toil. What's the point anyway? He'll just stand and not mingle. He'll be in a corner and not smile, maybe his time spent is not worthwhile. But I'll start work soon and earn my keep, I'll find a wife and have a kid.


When 20s flew past and I turned 35, I despise father very much. He retired with white hair and tired eyes, does nothing on a couch he sits all day. He keeps calling me to come home for dinner, but I'm too busy with life and has no more vigor. He asks often for more allowance, but I couldn't give him more than just a pittance. "How can I give you more", I said, "when I have my own family to care for?" Despite working all day and night, I just barely earn enough to get by. But that's okay cos my kid's the reason, for me to live and work hard till I too am beaten. I promise to teach him how to bike, and a kiss on the forehead before he sleeps at night. I know I've said that since yesterday, but work as always keeps me at bay. But I promise again my child one day, all the promises I've made I'll pay.


I was 45 when my father left, didn't attend his wake I must confess. Hardly had time to rest after work, but there's still a duty I cannot shirk. So I took leave and stayed at home, to make sure my kid is not alone. I may have raised my voice a little, but my love for him you cannot belittle. I know his friends travel, and their daddies buy them gifts, so that's why I've saved up a little, for a surprise on Christmas eve. I hope this savings won't be used up, to pay for emergencies. But sadly I'm ashamed to say, that it had always been that way.


With tired eyes and greying hair, I struggled at 55. I never thought I'll say this, but I think about father all night. Wasn't invited when my kid graduated, and I don't think I'll find out why. But I'm still proud of him and it's okay, as long as his future's bright. Besides I'm too tired from work to smile, I'll probably stand in a corner. A few more years I'll be retired, and then things will be all right.


I retired from work, aged 65, and there isn't much things to do. So I sit on a couch and wait all day, for the time my kid comes home. There is oft one pair of chopsticks, though I cook his favourite dish all day. I know why my allowance is so little - he's got his family to take care of. Sadly between his kid and his father, I know quietly I'm ranked down further. Father sometimes I'll think of you, calling me home to eat your stew. Father sometimes I miss you so, why didn't I call to say hello?


Now I lie bedridden all day, my age is 75.  What I really want to see, whenever I opened my eyes, my kid my grandson surrounding me, to tell me everything's alright. But the closest thing I'll get, is not the warmth of gentle hands, it's an old faded photo, trapped in a cold and sullen frame. How could things begin so right, in the end become so wrong? I can't stand, can't do anything, except to reflect and think what's wrong.


Kiddo, when I leave this world, don't ever be like me.

Daddy, you'll see when I join you soon, I grew up just like you.

Wednesday, June 14, 2017

The 4 Seasons

There is a time and season to do certain things, and most things go about in their own cycles. It's the same for investing or trading. There's a time to sow the seeds, a time to wait, a time to harvest and a time to just lie in bed and do nothing. Today, we're going to talk about the seasons in my trading.

There are 4 seasons: Spring, Summer, Autumn and Winter. Each defines a certain mood that characterizes both the change in climate as well as the activities that follows it.

Spring: A new hope, a new beginning. This signals a change from the cold harsh winter months. The first shoots breaks out from the soil to welcome the warmer climate.

Summer: Hot hot hot. Every one is coming out to play while the sun shines the brightest and longest. Full bloom of the flowers.

Autumn: Weather starts to turn a little cooler. The colourful bloom of flowers is all but over while the leaves shed to prepare for the winter months ahead.

Winter: Cold, dry and lifeless. Animals hibernate, humans hide in warmth together.


We can tell which season by looking at an oscillator like the MACD histogram. Just look at the slope and the direction of the histogram (is it above the x-axis or below?).

Spring: MACD slope is positive, histogram below x-axis
Summer: MACD slope is positive, histogram above x-axis
Autumn: MACD slope is negative, histogram above x-axis
Winter: MACD slope is negative, histogram below x-axis



So, do you buy during winter, spring, summer or autumn? It depends on your school of thought. I'm a counter-trend person, so I'm much more active during the coldest part of winter towards spring. I think most trend followers will be much more active during summer. No wrong or right, just preference and temperament. I'm long only, so I try to buy during winter and sell during summer, but I can imagine a short only person doing completely opposite of what I do i.e. sell during summer and buy back during winter.

Let's take a look at STI with regards to the 4 seasons. Below is the daily chart of STI.



First of all, it can be a complicated year with more than 4 seasons. Blame it on climate change lol! We see winter-spring-summer-autumn then followed by a complex winter-spring-winter-spring and finally summer season.

But let's zoom out and see the weekly chart. The weekly chart allows us to view the bigger picture, which is about 5 times more than the daily chart. Why 5 times? There are typically 5 trading days in a week, so each bar on the weekly chart represents 5 trading days worth of information. Hence, looking at the weekly chart allow us to see the macro view in a way that the daily chart can't allow us to see. It's like looking at the hour to hour weather vs day to day weather and month to month weather. As the time frame gets longer, you see the bigger picture at work.



What do you see? I see a summer and an autumn that is long gone since April. Not sure which season we're in right now, because it looks like a protracted autumn or an incoming winter. Or maybe the weather will change and we're back in summer? Who knows such things? (Those who are interested might look at the monthly STI to see another perspective of the situation we're in.)

I know since it's not the deepest winter yet, hence my watchlist is almost empty, I should make hay while the sun still shines. When the cold wind nearly dies down, and just before the robins and the first shoots are out, and while the bear is hibernating, I'll be there. In the meantime, Bully the bear will prepare for winter by eating more to put on enough body fats to make it through the winter LOL

Friday, June 02, 2017

My almost half year reflection

Time only gets faster and faster as we get older and older. It's the same for this year. Before I knew what happened, June is here and almost half a year is upon us. Let's have a review on what had happened in this year so far.


1. Greatest event of the year - birth of my son

My son continues to be the source of sleeplessness, frustration, joy and happiness for me. Life is a lot different compared to a few months back when me and my wife are still living as a couple. Now with the '3rd party', we effectively reduced our weekly trips out tremendously. It's a quick sneak out to get groceries, or to have a bit of dim sum, but that's pretty much it. It's baby - work - baby - sleep cycle for me. I'm not complaining, nor am I missing the life as a couple without kids, but I'm just noting down the differences.




2. Reading goal of 52 books a year - way off track

Can't do that. I realised in the first month of my son's birth that I can't hit my reading target. With a baby, everything comes to a standstill when he cries. I'm in my 11th book now, and it'll be a cause for celebration if I can hit 15 books in this year. But so be it. I'm changing my reading habit and reading deeper now (actually, I'm studying books now), so I welcome the change. I'm letting go of this target for now.


3. Savings 50k per year - on track

I'm working a little lesser this year because I need some time off for my family. It's the 5th month into the year and I've accumulated about $29k in savings, so I'm sure I can hit my target savings of 50k per year. This is a good achievement for me, because I know my spending had increased in some areas. As a result of lifestyle changes, some other areas had reduced spending as well. I'll give a few examples below:

My water & electrical bills shot up by 30% to $160 per month. Likely because of the overnight air-conditioning since the baby sleeps better. Cooking more often at home now too, so these two reasons are main cause of the increased bill size. Should see more increase in the latter half of the year as the unit charge of water and electricity goes up.

My restaurant bills went down from 66+%, from about $300 a month to about $100 or even lesser. That is because the frequency of restaurants trip decreases tremendously. I'm eating more at home as my mum came over to help us cook for meals. Hence the groceries bills also went up from $300 to about $800 per month, more than doubled.

I also bought quite a lot of stuff from qoo10 until I'm now a GOLD member. Bought stuff from Lazada and redmart too. Usually these are baby stuff but there are also home improvements things that need replacement due to wear and tear. Crazy year this is.


4. Relationship with mum - from average to strong

My mum is a great help. Besides bringing an experienced hand to help us and guide us in taking care of my son, she also cooks for me and my wife. Home cooked food is the best, seriously. I think my health went up a few notches after eating a few months of home cooked food. I also see how my mum handles the baby gently and never lost her patience. It must have been like that when I'm a baby in her arms too. I think the cycle has gone one full round. It's important to forgive whatever wrongs your parents had done to you (or not done for you) because we're all struggling as parents to give and love our kids the best we can do. I think because of the constant interaction with my mum, all of us, including my wife, had a stronger relationship with each other. That is the best side effect that happened when my son arrived.


5. Health goals - non-existent

No exercise, no pull ups, no jogging. Nothing. To be honest, even if I can muster the time, I might not have the energy to do so. Constant lack of sleep makes it hard to commit to anything. I think this situation will improve as the baby grows older and more independent, but as of this year, I doubt I can do anything about it. Not now. The only healthy thing is a diet based kind of system, not the exercising kind. Also stopped intermittent fasting because I keep getting hungry. Probably is the lack of sleep that causes the body to scream for more calories.


6. Starting Journalling - beginning of a new habit

I've been journalling these days. This meant that I write short notes on whatever happened to my mind along the day. I've purchased a google app for this purpose. I think it serves two purposes - first it helps me in my mind training to not judge anything and write down anything that crosses my mind stream. Secondly, it serves as a diary of sorts and helps me to colour my life. If I don't jot down the things that happened, I think each day will pass by even faster. I want to note down all the little things that happened in my daily lives so that I can look back a year later and see what happened. That should be interesting.


Such a drastic change to my lifestyle. Is it worth it? Yes, it's still a resounding yes.

Thursday, May 25, 2017

Is Haw Par a golden tiger or a sick cat?

This is a guest post by the kind folks over at Investingnote. It seems that now they have an in house technical chartist and an analyst as well. Good for them. It's quite a detailed analysis with FA and TA perspective, but this kind of company isn't my cup of tea, LOL. The chart failed to trigger any buys in my system, so yeah, it's good to know about the company and keep it in mind the next time you use their signature muscle rubs or ointment.

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A Golden Tiger: $Haw Par(H02 )


This column is jointly written by @fayewang, @calvinwee, @gordon_ong and @devinnath

 -Faye is both a fundamental analyst and economist by nature. She is a global thinker who’s open-minded and enjoys learning from the market.
 -Calvin is a fundamental analyst at heart and an ardent disciple of value investing. He relishes the process of searching for undervalued stocks and enjoys collecting dividends from his stocks.
 -Gordon has a demonstrable interest in equity investments, financial markets, and negotiating deals. As @NTUInvestmentClub president, he has an understanding of what factors drive an organisation’s success. -Devin is a technical analyst who balances FA and TA in his investment decisions. He believes in using news and FA to spot the right stocks and rely on TA to give him the lowest risk-to-reward ratio possible.

Brief Background: Haw Par Corporation Limited is engaged in manufacturing, marketing and trading healthcare products; providing leisure-related goods and services, and investing in properties and securities. The principal activities of the Company are licensing of the Tiger trademarks and owning investments for long-term holding purposes, the history of the brothers Haw and Par traced back to the 19th century. The company distributes its products in the Americas, Africa, the Middle East, Asia, Australasia, and Europe.

Product Segments: Haw Par operates in four segments, namely
1) Healthcare - principally manufactures and distributes topical analgesic products such as Tiger Balm and Kwan Loong.
2) Leisure - provides family and tourist oriented leisure alternatives through its owned and operated oceanarium, including Underwater World Pattaya in Thailand.
3) Property - owns and leases out various investment properties in the Asia region.
4) Investment - invests primarily in quoted and unquoted securities in Asia region.

Performance Summary: Haw Par recorded a dip in profit from operations and investments of 2% mainly attributable to lower dividend income from investments. However, it should be noted that all operating segments generated higher profits in FY16. The healthcare business segment continued to contribute significantly to the Group’s revenue with a 16% increase in revenue from $152.6 million to $176.4 million. Correspondingly, healthcare’s profit increased 37% from $48.1 million to $66.1 million with higher sales and reduced operating expenditure. However, revenue from the leisure business segment registered a sharp drop of 34% to $8.4 million due to the closure of Underwater World Singapore (“UWS”) in June 2016. Therefore, leisure recorded profit of $0.9 million in FY16 compared to loss of $4.3 million in FY15 due to the one-off impairment charge in fixed assets of UWS in 2015.

Financial Highlights:

 



 1. Operating performance Haw Par Corporation’s revenue has increased steadily since 2012, and this is also reflected in its profit before taxes. However, PBT decreased slightly by 1.6% yoy due to the lower dividend income received from investments. In that light, it should be noted that all of its operating segments generated higher profits yoy, however the profit contribution from Investments dropped by 31%, leading to an overall decline in PBT.

2. Financial & cash position Haw Par’s Operation Cash flow recorded yoy increase since 2012, and FY16 was no different since it reported higher profits across all its operating segments. However, there was a sharp drop in its total cash flow by 30% yoy. This is attributed by the decrease in financing cashflows by $24.8Million. Correspondingly, it recorded a fall in the lower cash and cash equivalent in the balance sheet by 0.51% yoy.

3. Segment performance Traditionally, Haw Par Corporation derives its revenue from the investments income segment. The overall group revenue for FY16 at $201.6 million grew 13% yoy, with Healthcare and Property recording 16% and 25% increase in revenue respectively. Operating segment profits before interest expense and tax for Healthcare and Property grew 37% and 22% respectively. However, investments income decreased 31% due to lower dividend income from investments.

4. Stock information Haw Par Corporation has a very low D/E ratio of 2%, hence it can raise additional financing if they wish to acquire more assets in any of their business segments. On the other hand, Haw Par does not have a remarkable ROE and ROA, hovering between 4-7% from 2012-2016. This is likely because most of its business segments are in the mature stage and have limited growth potential. However, it should be once again noted that it derives most of its revenue/profits from its interest in UOB, UIC and UOL group, hence its overall profits is highly dependent on the performance of these 3 companies. Haw Par has a dividend yield 1.9% for FY16. We were unable to find a comparable company for Haw Par Corporation in the SGX stock universe, hence, we decided to skip the peer analysis for Haw Par Corporation.

SWOT Analysis


Strengths:

1. Renown of brand. Brand of Haw Par retains a history over 100 years that can be traced back to 1920s. With famous Tiger Balm as its representative product, Haw Par held competitive advantages of competition in the healthcare industry considering exceptional brand awareness. Despite the long history, Tiger Balm became iconic for the sake of its incorporation in Singapore traditional culture. Brand loyalty is another benefit from well brand management. It is brand loyalty that become a significant obstacle for new entrants, as they may fail in the competition due to strong brand loyalty of customers to existing players.

 2. Uniqueness of products. Haw par differentiates its Tiger Balm from other healthcare products with secret herbal formulation. Therefore, the effect of substitution seems limited to Tiger Balm. For sure there are other pharmaceutical manufacturers who provide analgesic products, for instance, liniments or oils made by using Chinese medicine. Nevertheless, they can merely bring competition but cannot replace Tiger Balm. In Singapore market, the uniqueness of Haw par is more apparent, it is difficult to find a listed company that operate similar business as Haw par does.

 3. Organic Growth of Core Business. Though Haw par is involved in various industry such as property, leisure, and investment, its core competency is derived from healthcare segment. Growing proportion of profit from investment segment has been observed in recent years, which makes Haw par looks like an investment holding firm. However, it is worth noting that revenue generated from its healthcare products enjoy continuous growth with an average rate of 40% over 5 years.

Weaknesses:

1. Haw Par’s leisure segment. Main business of Haw par’s leisure segment is its Underwater World Pattaya (UWP) in Thailand and Underwater World Singapore (UWS) in Singapore. Profit contributed from Leisure segment has experienced continuous decline since 2012. The segment suffered from loss in financial year of 2015, which is related to the terrorist attack at Bangkok in August 2015 and flash flood in Pattaya. Leisure’s profit swung to black in 2016, while Haw par decided to close UWS afterwards. The close was claimed due to the expiry of lease contract on Sentosa island, albeit more likely to be for profit improvement purpose.

2. Investment portfolio. In Haw par’s balance sheet, financial assets occupied 81.9% of its total net assets. In other words, majority of its net assets is made of securities of UOB, UOL, and UIC, which worth $2 billion in 2016. Therefore, Haw par’s profitability is closely tied to the performance of UOB, UOL and UIC. The investment portfolio cannot be considered as absolute ‘weakness ‘of Haw Par, but it exposes Haw par with greater volatility to the performance.


Opportunities:

1. Further expansion. To fully utilize the renown of Haw par’s brand, Haw par can make more efforts to expand their business for greater presence in the global market. At the current stage, income generated from local market merely occupies 18.6% of the total number, meanwhile 35% of the revenue contributed by other Asian countries outside the ASEAN area. Based on the data, we can conclude that Haw par has exploited and penetrated the Asia market, but seems has not started its exploration in other potential countries. With sufficient cash in hand and light debt burden, Haw par is at an appropriate position for global expansion. The expanding strategy can be introducing new products in various markets through franchise.

2. Segment restructuring. Haw par has closed the Underwater World Singapore (UWS) in Sentosa island, thus the segment of leisure greatly shrunk in 2016. As mentioned in the weakness part, the leisure segment suffered from plummeted revenue and the loss even eroded profit from other business. It might be wiser if Haw par gradually shift their investing emphasis to healthcare and investment business only.

3. Long-term flourish healthcare industry. The growing number of aging population and better awareness of healthcare jointly lead to stronger demand for healthcare services in the future. Advanced technology allows Haw par to extend its products line and seek for more opportunities in this resilient industry. Threats: 1. Increasing competitors. Rapid growth in healthcare industry has attracted more companies to enter and share the market pie. Increasing number of competitors is the biggest threat Haw Par is facing now. Products such as Yunnan Baiyao from China and Mopidick’s from Japan have brought intense competition to Tiger Balm.

Key Drivers & Limitations 
Expanding to new markets and modernizing the Tiger Balm brand


Haw Par’s strategy of widening Tiger Balm’s product offerings to include Medicated Plasters, Mosquito Repellents, Cooling Patches and Lotions, as well as modernising the packaging and marketing strategies, seems to have revitalised its attractiveness to consumers. Haw Par has also successfully capitalised on the recent ASEAN mosquito virus outbreaks to increase sales. With such outbreaks being frequent within the region, Haw Par has a consistent sales driver.

Haw Par has also capitalised on Tiger Balm’s brand strength to attract distributors and remain asset-light – recently, it has partnered with Alkem to expand its distribution network in India. Haw Par’s distribution network remains formidable throughout the world. Such a business model means that Haw Par can sustain its high margins in the foreseeable future.

Acquisition for growth in Healthcare/Leisure segments 
Haw Par is currently seeking acquisition targets to utilise its net cash position. It has stated that it may do horizontal integration of other healthcare products to add to its Tiger Balm brand. Such an acquisition will support the overall business-level strategy of dominating the topical analgesic market through consolidation under a single brand. Haw Par also seeks to acquire leisure destinations to utilise its decades-old expertise of running tourist attractions. Depending on the acquisition target, this will most likely increase Haw Par’s low ROE and unlock shareholder value. Haw Par seeks to maintain its low profit margins; hence it will most likely acquire products rather than expand overseas using physical stores.

Exposure to Banking and Real Estate Sectors
Haw Par not only has equity investments within banking and real estate, but also has its own property division. Hence, its asset value and investment income stream are exposed to the high earnings expectations on SG banks, as well as occupancy rates/rental yields from its SG and MY properties.

Analysts’ Opinion 
Key takeaways by @calvinwee

Haw Par is a household brand synonymous with its flagship product: Tiger Balm. However, with deeper analysis, one will realize that over the years, Haw Par Corporation has diversified into different business segments such as leisure and property. Also, management has shown great prudence in maintaining a strong balance sheet and free cash flows. Most importantly, it derives a substantial portion of its profits from UOB, a big 3 bank in Singapore. I am of the view that its healthcare segment has the potential to grow, albeit at a slower rate, with its expansion into European and US markets. Barring no major changes in the 3 companies that it is vested in, Haw Par Corporation is a safe haven amidst the volatility in the market.

Comments below is written by @Gordon_ong:

Haw Par is a Portfolio of UOB, UOL and UIC at deeply discounted values 
To find out what is Haw Par’s current equity stake in UOB, UOL and UIC, we first assume that there are no changes in shareholdings since FY16 annual report. To test this assumption, we will see what is the fair value change on these financial assets (FVOCI) for 1Q. If there are no changes in shareholdings since the last annual report, the fair value change should be 182m.

   

 The actual fair value change as stated in 1Q report is 189m, almost the same as assumed. Hence, we can conclude that there are no significant changes in Haw Par’s investment holdings.

   

Hence, based on the share price of $10.43 and market cap of $2.290B, the Total Enterprise Value is $2.015B. This TEV includes a liquid portfolio of 3 shares with combined market value of $2.2B, Investment Properties of $200M valuation, and a business worth about $1B. Based on a sum-of-parts valuation, TEV should equal to $3.4B and market price should be ≈$15. It can be argued that the market has grossly undervalued the price of Haw Par. In fact, purchasing Haw Par shares means acquiring an investment portfolio for cheap, as well as a stake in the investment properties and the underlying Haw Par business for free. 

Usually, stocks that trade at a discount to NAV have negative operating profits. However, in Haw Par’s case, not only is the Tiger Balm healthcare business still profitable and growing, the net assets are not hard-to-dispose-of fixed assets, but equity stakes in other businesses. 

One consideration is whether Haw Par is a “value trap”, a.k.a Haw Par will hoard the dividends paid by its investments within its business without distributing to its shareholders. Even in this worst-case scenario, as Haw Par’s main businesses are profitable, defensive and secured by a deep economic moat (brand strength), Haw Par’s cash position and equity stakes will just grow indefinitely until a catalyst unlocks value for shareholders e.g. continued growth of healthcare product segment or some form of M&A. To test whether Haw Par hoards cash, we simply measure the investment income received vs. dividends paid out.

   

 While Haw Par does retain a portion of its investment income, its other business segments contribute such that the total dividends paid is higher than an equivalent weighted portfolio consisting of UOB, UOL and UIC. Notably, healthcare segment’s growth in new markets support Haw Par’s ability to pay out higher dividends recently. 

The Dividend Payout Ratio and Historical Dividend Yield also show that dividends from Haw Par is near equivalent to investing in a weighted portfolio of the 3 stocks. Even though the dividend yield of Haw Par is slightly lower, the excess cash is going into Haw Par’s cash reserves. Hence, the 48 b.p. is not lost, but merely locked up within Haw Par’s cash reserves, which shareholders still own a stake of. 

Overall, Haw Par does indeed distribute its investment income from its equity portfolio to its shareholders. A shareholder of Haw Par will gain more dividend benefits compared to directly holding an equivalent portfolio of the three shares. As the risk of Haw Par suddenly hoarding investment income is negligible given its track record, there should not exist such a discount on valuation for Haw Par’s equity portfolio. 

Unless you believe that UOB, UOL and UIC are grossly overvalued by the market, as long as Haw Par’s TEV remains lower than the market value of its equity portfolio, it makes complete sense to buy more of Haw Par. While acknowledging that Haw Par has been consistently undervalued for the past 10 years vis-à-vis its equity holdings, the gap between Haw Par’s value and its equity holdings has narrowed, signaling that the market has taken notice. 

Investors should view Haw Par primarily as an Investment Holding company at discount prices, with its success as a healthcare product company as a pure bonus.

For investors interested in $UOB(U11), can consider purchasing shares through $Haw Par(H02) for greater value. A portfolio of banks, real estate and healthcare seem to fair well against interest rate risk. Vested in Haw Par; DYODD. Downsides: During expansion, management may decide to modify Haw Par’s healthcare segment from an asset-light distribution model to an asset-heavy model, requiring cash. However, unlikely based on conservative management’s previous reinvestment rate. Also, SG Banking and Real Estate sectors may weaken affecting value of equity holdings – yet holding an isolated UOB/UOL/UIC stock will be even worse in that scenario. 

Technical Analysis 
 From TA (Technical Analysis) perspective, followings are the analysis of Haw Par as of 23rd May 2017. This part is written by @devinnath.

 

-Taking highest high and lowest low from 12 month time frame (July 2016), it appears that Haw Par stock price has been testing the resistance line at $10.500 since the beginning of May 2017. 
-Channel width is considerably wide, contributed by the bullish steam at the start of 2017 (Jan-Feb). Although an untested weak support range is formed between $9.745 and $9.837, strong support remains low at $9.360 
-Stochastic Oscillator (14,3,3) and MACD (12,26,close,9) both agree that there is no apparent highlight of trend being formed in the past month, although both indicators signalling a slight uptrend (MACD : 0.1117) and minimal buying pressure in the market (slow %K = %D : 65). 
-Parabolic SAR on the other hand acknowledges the position of the price on upper boundary of Bollinger Band (20,2) by showing a possible price stop and reversal, hence the stock price might be taking a bearish stance in the near future. 

I believe that it is rather reasonable for investors to expect a significant attempt to break the strong resistance line at 10.500. This attempt will be indicated by a sharp hike in price above $10.500, which the result will determine the future trend direction of Haw Par stock. 

Best case scenario: If price manages to break the resistance line and stays there for at least 2 days, then high chance it will continue to take its bullish stance. Once its position is reinforced, it will be the perfect time to enter the trade. 

Worst case scenario: If price fails to stay above the resistance for 2 days, similar event with 12th May might reoccur, e.g. price broke through the resistance but failed to maintain its stance as bearish engulfing pattern appears the following day. It will form a double top pattern which might impose a very strong selling pressure. This might be followed by breaking the weak support towards the strong support line. 

Conclusion: In order to mitigate risk, It will be in our best interest to wait and see how the market behaves around the resistance and let time reveals itself. 

This article is written by by @fayewang, @calvinwee, @gordon_ong and @devinnath from InvestingNote. 


InvestingNote is the free social network platform designed specifically for crowdsourced investment ideas, news and interaction for the holistic stock investing community. Investors can identify trends, market movements and sentiments through crowdsource analysis that can make them better at investing. With free access to a wide variety of stock data, investors can upload research reports, utilize technical charts and make stock price targets that will be visible to other investors. It promotes financial literacy and connects investors for better investing outcomes. Our users come from a wide spectrum of the investing community: remisiers, brokers, brokerage houses, financial writers, financial bloggers and the general retail investors.

Monday, May 22, 2017

The math of crisis investing

I want to find out what is the possible rise in my portfolio after investing during crisis, and in so doing, I can find out the optimum amount of cash to keep. The problem with cash is that while it's very useful during crisis, there's a cost to it. It's the drag on your portfolio return, that is, your cash is rotting in the bank doing nothing. On the other hand, investing throughout the ups and downs will mean that your portfolio volatility will be swinging in extremes too. Not for the faint hearted.


I start off by looking at Straits time index in the past. These are the major crisis that happened and what the STI returns look like after while. The first dates indicated the lowest point in STI while the second date refers to the apex of the bull run that occurs after market recovers. The % refers to the percentage increase i.e. 220% means if you invest 100k, your portfolio will increase by 220k.

1998 Sept to 2000 Jan - 800 to 2580 - 220%
2003 Apr to 2007 July - 1220 to 3900 - 220%
2009 Mar to 2015 Apr - 1450 to 3550 - 145%

The last current bull run might be still 'running'. As you can see, all these are from hindsight. It's not clear until after the fact had happened. Since I can't predict the future, well, the past history is all that I have.


Assuming that we can only capture 70% of the bull run from trough to peak, we are talking about 220% x 70% = 150% gain or a 250% increase in portfolio. Let's use that figure to guesstimate our returns from crisis investing.


If we keep 100% cash and invest during crisis, we can realistically expect to get about 150% increment. That means we're looking at 225% increase in our portfolio. If we keep 80% cash, and invest during crisis, we can realistically expect to get about 200% increase in our portfolio. If we keep 60%, we can expect to get a 175% increase in our portfolio. If we keep 40%, it'll be 150% increase in portfolio.




Here's a few thoughts:

1. If you think the returns are too low, you can leverage. But it comes with its own set of problems.

2. If you're hoping to become a millionaire after the crisis, you have to be realistic. Ask yourself how much you have in your portfolio now and how much cash you are keeping and how long are you waiting for that big crisis to happen. We haven't even talked about whether you have the balls to go in while others are busy rushing to get out.

3. Since STI tracks only blue chips, which are safer, we can technically do a few rounds of the crisis investing. When STI is at the trough, we get into blue chips first. Once the blue chips recovered and STI goes up, people will take notice of the rising market and get in, so we get out of the blue chips and enter the mid/small caps before they do. When the blue chips had finished rising, the next rotation will be the mid/small caps, so technically we 'compound' our cash faster. Instead of going in and out during crisis, we recycle our capital and do it within each cycle itself. Easier said than done, of course, but that's the plan. The execution depends on your skill.

4. For me, I aim to get around 40% to 80% cash during crisis. That should realistically get me a minimum of 150 to 200% increase in my portfolio growth organically. Haven't include recycling of capital or injection of new capital or dividends.

5. We only get 2 rounds of solid crisis and I've wasted one already. I can't waste it anymore. Save hard, work hard on my craft and execute it. I don't want to be caught in a crisis without the cash to utilise, or the psychology to take advantage of it. If executed properly, this can save me a few years of my life.


Updated (22nd May 2017)

Thanks to theintelligentinvestor from Investingnote community from spotting my calculation error in the percentage. At first, I still thought that crisis investing is still alright. Now, with the changes in the error, an organic portfolio growth of 150 to 200% is crazy and I know it's do-able!

Monday, May 15, 2017

The evolution of needs and wants

My baby is slightly more than 3 months old now, and I learnt a lot from the experience of being a first time father. One of the first things I get to observe is how the needs and wants of the child develops as he gets older.

When my son is less than 1 month old, the term 'needs' and 'wants' are interchangeable. You can even say that the needs and wants are indistinguishable from one another. The default mode of the baby is sleep. If he is not sleeping, it's because of the following reasons:

1. Food
2. Change of diaper
3. Hug

Took us a few weeks to get it right, but once I thought I mastered the art of baby soothing, the baby evolves. After 1 month to 2 month, the needs and wants changes, so we have to adapt to them again. Here are the needs:

1. Food
2. Change of diaper
3. Hug in the right manner
4. Rock

Okay, it's still alright, I thought to myself. I can't hug it anyhow, because the baby needs to feel right. I also have to rock the baby to quieten it down. Thankfully I have a gym ball that my wife uses pre-child, and we can sit on it while hugging the baby and bounce up and down on it. That makes the rocking part manageable, because at this point in time, we're holding a 5kg weight that can scream, puke, cry and smile.

Around 2 to 3 months, just as we thought we got the hang of it, the baby evolves again. They say change is the only constant, and I say the person who came up with that saying must have been parents. So their needs/wants became:

1. Food, but must be of the right temperature
2. Change of diapers, but must be fast
3. Hug in the right manner, but must change position every now and then
4. Rock, but only after doing all the above
5. Temperature - must be cooling enough
6. Play - you need to spend time interacting with me!
7. Sleep in the right position

Wah, suddenly as the baby's sight improves and the brain functions start to whir in action, there's more and more things that we need to do right. If the past history can be extended to the future, there'll only be more needs and wants, and soon there will be a differentiation between the needs and the wants. Then what happens?




Depending on individuals, there'll come a inflection point where the needs and wants stop increasing. It starts to stay constant, then decrease as we age further. All the wants are removed, leaving only the bare basic needs. And when we're on our dying beds, I suspect strongly that the following needs are as follows:

1. Family
2. Happiness
3. Free of suffering

I've mentioned earlier on in the article what my son's 1st month needs are. Let's review them again:

1. Food
2. Change of diaper
3. Hug

Hey, isn't that the same wish list as that in our dying beds? It's of a different form but it's essentially the same theme. Food, change of diapers and hugging is the expression of the same values as family, happiness and free of suffering, but specifically exhibited by a baby. Food and change of diapers is the baby's equivalent of 'free of suffering'. Hug is what the baby's equivalent of 'family'. I've always said that a child is like a buddha-baby. A child is extremely enlightened in what the important things in life are, and we, as adults, can take a leaf out of his/her book.

Saturday, May 06, 2017

Fear-based selling

There's a lot of fear out there. Everytime you switch on the news, out of 10 news, perhaps 8 are bad news. Maybe some air plane crashed, some terrorist attacks somewhere, some murders elsewhere. Then comes the commercial interval selling things. It's known that fear can trigger emotional buys (for certain items), so is this the way to pre-suade consumers to part with their money?


A typical example would be that of a insurance agent. The sales pitch is that you don't know when you're going to die, and there'll be huge medical costs, and you must be responsible for your family and so on. That's fear based selling. It can be for a tutor too. Oh, your child is going to fail his O'lvls because his foundation is so weak. There's only 4 months to the major exams and he's so weak in his foundation, so do you want to increase the number of lessons during June? Fear based selling. How about a furniture seller? This special promotion is only valid until today, if not it'll revert back to the original price which is 20% more than the current. Oh, this is the last piece left, and someone just called me to ask me about it. Do you want me to reserve it for you (by paying a deposit) so that the other caller don't be able to have it?


Fear sells. But it leaves a bad taste in the consumer's mouth after buying it.




In the stock market, there's also fear based advice. This stock is going to run if you don't get this. Or I've a whatsapp group that offers great advice for people because there are so many people in there with eyes on the market 24/7, and I'm offering you at this great price for only a limited period of time. Everyone is making big bucks in the chatgroup, so why don't you join? Fear of missing out is also a fear based selling.


As STI marches past 3200 and still moving upwards, beware of more and more people doing fear based selling for all sorts of things. If memory serves me right, in the last major bull run, there are a lot of gurus offering crazy returns by attending this workshop and that, a lot of cheating incidents and a lot of funny ways to make crazy returns in oil, land banking, crabs, trees or what have you. You see it everyday in the newspaper, sometimes with ads like these taking up a quarter of the page. You don't see such things when the market is depressed.


Look at this piece of news back in 2007 here. It talks about university undergraduate making huge money in the stock market, so they are chasing grades and trades. Or this one, also in 2007, here (courtesy of musicwhiz). This one is a memorable case study of a student who made up to 80k per month trading in the height of the bull run. Just a few months later, he lost all and more, including his parent's life savings of 300k. I just want readers to be aware of such emotional battles. When people are making huge money and you have a lot of cash rotting in the bank, are you able to withstand the pressure and all the fear based selling and NOT commit to mistakes?

Saturday, April 29, 2017

I don't read; I study

This year is turning out to be a year of new systems. I had already implemented two systems, which I've dutifully blogged about in this post here. I'm still using them and they are serving me very well.


This new system is a overhaul of a old one that dated back in 2007, so it has been active for about 10 years. I used to have a reading target of 52 books a year. I say 'used' because the new system seeks to overhaul this old one. Reading 52 books a year means essentially reading one book per week. While I failed to hit target in some years, I succeeded in some too, and overall I'm the greatest benefactor of this reading habit. If you have to read one book a week, I'm sure you won't have a lot of time to watch TV or surf the internet and such time wasters. In trying to find 52 worthy books to read, I also have to spend some time curating the good books that other people are reading.




The bad thing about reading 52 books a year is that I always find that I'm rushing to finish off the book and go on to the next one. While the goal is a notable one to urge me to read more, it has slowly become one of those checklist that I want to fulfill. In other words, I read for the sake of reading and to fulfill that goal. That makes the goal meaningless. There's scarcely time to reflect. When I did was to devour plates and plates of brain food in a endless stream of buffet items without really having enough time to savour and digest each mouthful. It wasn't totally useless, because while I do not have the depth of understanding each book as fully as I would like to have, I did have the breadth and with it comes the knowledge of what I like and do not like.


The motive for a change of system came when I became a father this year. I thought I had fully utilised my free time before I was a father, but I thought wrong. There are always more pockets of time that I can squeeze, that I need to squeeze. It became clear that I won't have the time to do 52 books a year anymore. What if I am reading and missed the first smile by my son? What if I missed his first step? The cost is too great.


Thus, it's high time to reduce the breadth and go deep. I don't read books these days; I study them. I study them by reading it once, then type a summary of each chapter or the points that cry out to me for the entire book. I'll read the summary a few more times when editing them before declaring I'm done. I've done it for a few rounds already and here's what I found out:


1) This is such a good experience. When is the last time I've studied something like that? I might want to do an experiment where I only read just 1 book in one year. I'll read it again and again and again just to have a contrast between the old system where I was reading so many books. One is breadth while the other is in depth.

2) The amount of things I retained from merely writing a summary is tremendous. Usually after reading it only, I can remember a few key points and these key points will be forgotten in 1 month, 6 month or in a year's time. By actively summarizing and typing it out, I get maximal retention. Even if I've forgotten the key points, I can always review the summary again to refresh.

3) I effectively shifted my focus from hitting "x" books a year, a meaningless target, to learning as much as I can from each book. The shift in focus is very liberating to me.  

4) Having practiced summary writing for a while, I find that while reading, I will also subconsciously try to find an overall structure to each chapter. I will browse through each chapter to get a feel of the layout before I begin reading. The structure acts as the skeleton while the points and example as the flesh that clings on to the structure. Within the book there is also an overall structure that lays out the main argument of the book clearly. I find myself going back and fro and looking at the table of contents a lot more these days. Now I'm wondering if I'm actually reading a book in the past 10 years! There's so much things that I can get out from a book and yet I'm only reading the text!

5) It takes me about 1-2 weeks to get the summary done. During that time, I will be reading the re-reading previous chapters to feel the overall structure. That gives me plenty of time to reflect and think and integrate the new materials.


To play a piano while, we first learn the rules and obey it strictly. When we can do that very well, we earn the right to 'play' the piano. Thereafter, we ignore the rules, experiment and improvise. Isn't that what I'm doing here too? I begin with an unforgiving goal - to read 52 books a year. I've done it a couple of times to know that I can read. Now, it's time to really play-read a book.

Monday, April 24, 2017

Government paid child benefits for self-employed

It's always hard to find stuff for self employed individuals like me, so since I've already done my research, I might as well share it with others who are in a similar situation as me. I just had a baby boy and he's doing mightily fine. As a self employed, I have no company benefits as a father. Since almost all the benefits given by the company as a employee is co-shared by the government (meaning that the G will reimburse the company), I can only claim the part of the benefits that is given by the government, called Government Paid Paternity Leave (GPPL). What about the company's portion? Too bad, that's part of the cons of being a self employed, so I can only LPPL.

There are two benefits that a father can claim, if you fulfill the following conditions:

1. Your child is a Singapore citizen
2. You are lawfully married to the child's mother 
3. If you're self employed, you must have engaged in your business for at least 3 months before the child's birth 

As a working father, I'm entitled to 3 types of benefits:

1) Government paid paternity leave (GPPL)
2) Government paid shared parental leave (SPL)
3) Government paid childcare leave (GPCL)

A lot of information can be found in the aggregate of links here. But trust me, it's actually quite confusing, especially when there are so many links point here and there. I digested as much of the information as I can, and as accurately as I could, and present it here:


Government paid paternity leave (GPPL)

I'm entitled to 2 weeks of GPPL. There are 2 ways to take the paternity leave. You can either :

a) take it in one continuous block within 16 weeks from the birth of the child. This means 14 calendar days, inclusive of weekends and public holidays taken consecutively from start to end. OR

b) take it by days, with a break in between leave dates, within 12 months from the birth of the child. This is will be based on the number of working days you have per week. If you work on a 5 day work week, your total entitlement will be 2 weeks x 5 workdays per week = 10 days

The leave is also subjected to a cap of $2,500 per week, so one cannot claim more than $5,000 from the GPPL for the 2 weeks. The exact payment is calculated based on our notice of assessment from the IRAS, specifically, the net trade income portion. Exactly which year of assessment of our tax will they use, they are unable to advise. I found this, read it, yet I ended up being as clueless as I started. So I emailed them.




They can only say that the latest net trade income details in their system at the point of submission will be used, and if there are any discrepancies, we can write back to them by providing the notice of assessment for their review. 

I did find out how they compute the reimbursement and that depends on whether you take it in one continuous block or take it by days.


I took (a) as I think it's better for me. You might want to calculate both and see which works out better for your case.


Government paid shared parental leave (SPL)

Government paid shared parental leave is the sharing of 1 week out of the 16 weeks of the government paid maternity leave by the mother with the father. For the father to even qualify for the SPL, the wife must first be eligible for government paid maternity leave in the first place.

This SPL must be consumed within 12 months from the birth of the child, and any unconsumed SPL after 12 months will be forfeited. There is no minimum period that an applicant must have carried on his trade, business or profession in order to qualify for SPL, as long as there is allocation from his wife to him in his current employment.

I have no experience in this as I didn't apply for this. My wife has problem claiming maternity leave as it as, so no help from me in this segment. The explanatory notes for both GPPL and SPL is here.


Government paid childcare leave (GPCL)

This is for both parents each to take paid leave to take care of the child. It'll be eligible for both parents per year until the child reaches above 12 years of age. Those who are employees will get doubled of what I'm going to write next because I think half of the childcare leave is reimbursed to the company by the government. Again, I'm LPPL so I can only take the GPCL, which is half of what normal employees are entitled to. For a child below 7 years old, the GPCL is 3 days per year per parent. For a child between 7 to 12 years old, the GPCL is 1 day per year per parent.

The calculation is based on the number of working days per week, and that you have to key in when you submit your claims. The formula is here:


Do take note that the childcare leave is subjected to a cap of $500 per day, so there'll be a cap of $1,500 per calendar year.

The full details for the GPCL is found here


Application

Before you apply, you need to key in your banking details and update your particulars.

A) Go to the government paid leave website here and login to the e-services as a self employed person


B) Click on Maintain profile and update your details, including the all important banking details. This will be the bank account that the money will be transferred to, when it is submitted and approved.


C) Under Online application, there are two options: Government paid childcare leave and government paid paternity and shared parental leave. The instructions are clear cut and you just need to submit the information such as working days per week, birth cert number of your child and the child's birth date etc. The whole process takes less than 5 mins to submit.


I think for both my submission of GPPL and GPCL, only 3 to 4 working days transpired between the date of submission and the receipt of the reimbursed money from the government. I think they have a service standard of processing the entire thing by 10 working days. The whole process is very smooth and painless, once you sort out what you can claim and how much.

Wednesday, April 12, 2017

Newbie's guide to market depth

SGX is running a promotion for free market depth information, limited from 3rd April to 30th June 2017. I’ve not seen them done this ever before, so perhaps they are doing this to boost the liquidity of the market, or to sell them the subscription. Either way, take this as a free trial and see if it’s useful for you or not. Quite a few brokers are participating in this, like CIMB, DBS Vickers, KGI, Lim&Tan, Kim Eng, OCBC, Philips, RHB and UOB Kay Hian. And before you ask, no, stanchart is not part of it, but you can always access the market depth information from other brokerage platform.

The more important question is how to use market depth. I’m the first to confess that I’m not an expert, but I’ve read and researched enough to know a tiny bit about it, so I’ll share with readers here. I divide this into two sections, the first are the points to look out for when using market depth and the second is about the limitation of the information you get from it. It’s good to know both the usefulness and the limitations of it. By the way, I’m using poems, so it might differ a bit from yours if you’re using other brokerage platform, but it’s largely similar.

Section 1: Points to look out for

1. Is it a buyer or a seller’s market?

By comparing the total buying volume on the left side and the total selling volume on the right side, we can see if it's a buyer or a seller's market. Buyer's market means that the selling will be very well absorbed with very little price movement downwards, because there are a lot of buyers waiting in line to buy. Conversely, in a buyer's market, any buying up will be met with lesser resistance because there are not a lot of sellers waiting to sell at higher price than the current price. In other words, in a buyer's market, the ease of movement of price upwards is easier than the ease of movement of price downwards. In a seller's market, the reverse happens - the ease of movement of price downwards is easier than the ease of movement of price upwards.

Buyer's market - note that there is so many pple waiting to buy on the Bvol side (left)

Seller's market - note that there are more pple waiting to sell on the SVol side (right) than the left

2. Check immediate resistance and support level

This is a TA concept. Resistance refers to a price where the price will likely hit a wall and move downwards. Support refers to a price where the price will likely hit a springboard and rebound upwards. Here, we are looking for big volume camping around a price range. If the normal queue is 1000, 800, 1500, and suddenly we see a 200,000 queue, then that is significant.

The left side represents the possible support level at 1.080. It's going to be hard to go below 1.080 for the time being. The right side represents the resistance level at 1.095 and 1.100. It's going to be hard to go beyond 1.100 for the time being.

Looking at the above pic on the left side, we can see that there's a huge volume camping of about 2.7 million shares at 1.080. If the price is to go below 1.080, it will have to break that huge wall first. Hence, for the time being at least, it's going to be hard. On the right side, we can see an even bigger wall of about 10 million shares distributed over 1.095 to 1.100 range. It's going to take a while to break that wall and go to 1.105.

If you're buying, and you want to jump the long queue, you might as well queue at 1.085. If you're selling and you want to jump the queue, you might as well queue at 1.090. That's just one way to see it. You can also set a order to buy at 1.105 once the market price reaches 1.110, because it means the the stock broke out of the huge wall block and that's usually a good sign. Go back to TA to decide what to do with the information you get from the support and resistance levels.


3. Can the market absorb my buying and selling?

If you want to sell a huge volume, you want to ensure that the price remains as stable as possible. You don't want your huge order to bring down the price and end up having a lesser amount at the end of your selling. Likewise, if you are buying a huge volume, you don't want the price to be bidded up too huge so that at the end of the day, you'll end up paying more for your shares. All these requires the market to have enough 'depth' to absorb both your selling and your buying, without affecting the price too much.

A good analogy is that of a reservoir. If you scoop up a cup of water from it, the water level is not going to change much because it has a lot of 'depth'. Conversely, if you pour a cup of water into it, the water level is also not going to rise much (not even perceptible!). If you do the same experiment on a pail of water, you can see the water level rise and fall much more appreciably. This whole concept is market depth.

SGX guide here already have a great example, so I'm not going to reinvent the wheel. I reproduce it here for your reference.



Section 2: Limitations of market depth

1. Market depth is dynamic.

The information is probably only valid for a day. Maybe just for a few hours. We don't know. The volume reflects the live order keyed into the system, so it keeps changing. In a fast moving market, a static picture of the live market depth information probably should have an expiry date of only a few minutes.


2. Order volume might be hidden

I know institutional traders can have an option to disclose a certain percentage of their trades in the system only, called disclosed quantity buying/selling. Let's say that a big boy (BB) wants to sell 500k shares at a certain price, it can choose to disclose only 5k shares in the system, so only 5k is seen in the market depth, and not 500k. Is this available in Singapore, I'm not sure about that though as this is something I've read about in US markets. If it's available here, then whatever you see in the market depth is just what others want you to see.


3. Order volume might be fake

The orders placed might not be real. By fake, I mean that there is no real intention to buy or sell the entire order seen in the market depth. The volume in the market depth can be removed at any time. It could be used to test the market or to find out who the counterparty is. There are several reasons why they want to do this. One reason could be to prevent the price from going above a certain price. Whenever the volume gets depleted, more volume will be topped up to discourage buyers from bidding higher. This same trick can also be used to dispose of shares in a very orderly manner without people knowing it. Only people with too much time watching the 'tape' can see it. In structured warrants, you will see lots of such actions happening.


4. There are buyers or sellers who do not queue.

You’ll only see something in the market depth if people queue for it. There are companies where buyers or sellers do not queue at all. Immediate transaction will happen if you sell at bid and buy at ask, so in such cases, it won’t be so useful.


Conclusion:

Market depth is paid for under a subscription. I didn't use it in the past because I'm too cheapskate to have it. Is it useful? Yes it is, but it's not essential. Good to have but not that important in the longer run. Perhaps it'll be more useful for intra day traders, which I'm not.