A movie: The Iron Lady.

I just watched "The Iron Lady" in which Meryl Streep plays Baroness Margaret Thatcher, the powerful former leader of Great Britain. Meryl Streep's performance was entrancing and she got the accent down pat!

It was a sad movie in the end but it was a sadness with an air of dignity.

Many things that Baroness Margaret Thatcher stood for in the movie resonated with me and I feel that Singaporeans or anyone, for that matter, would benefit from her wisdom.

This left the deepest impression on me:

“What I do think is a man should be encouraged to stand on his own two feet. Yes, we help people. Of course we help people, but for those who can do, they must just get up and do. And if something’s wrong, they shouldn’t just whine about it. They should get in there and do something about it. Change things.”

I have, whenever and wherever appropriate, made comments to the same effect.

When people tell me that they are just average people and that they cannot achieve financial freedom, I tell them to stop being average. Be more than average. Often, we are our worst enemies.




Related posts:
1. Do you want to be richer?
2. Envious? Find our own way.

Losing your hair?

Some of us might be suffering from pre-mature hair fall. I know many friends who are pulling out their hair because of this problem. Er... ok, bad joke.

Anyway, if you suffer from pre-mature hair fall, why not give natural remedies a try?

TK TrichoKare is a holistic hair and scalp care centre that provides European Herbal remedies (consisting natural botanicals such as Jojoba, Rosemary, Nettles, Burdock, Aloe Vera and Lavender) for all hair conditions.

Fill out your details and enjoy a special introductory price at TK TrichoKare: here.

Yongnam: FY 2011 results.

Went through Yongnam's FY2011 results as I munched on my lunch of wholemeal bread with margarine. I am very impressed with the results. For a company in a sector which is expected to suffer from the vicissitudes of cyclical effects with weak margins, it has done really well.

Year on year, revenue dipped 0.7% while gross profits improved 8.2%. Gross profit margin improved from 28.6% to 31.1%! This shows an increase in productivity. I always like using less resources to do more.

EPS improved 15.5% year on year from 4.38c to 5.06c. NAV improved from 18.92c to 23.25c. This is an increase of 22.9% as gearing reduced 38.8% from 0.49x to 0.30x. Earnings and assets are up while borrowings are down. Very nice.

To make the picture nicer, a dividend of 1c per share has been declared. This represents a pay out ratio of about 19.8%. At a share price of 25.5c, it translates to a dividend yield of 3.92%. 

The dividend paid out in the preceding year was 0.65c per share. Dividend per share has grown 53.8% year on year, therefore.

In FY2011, Yongnam saw greater contribution by its Specialist Civil Engineering business which commands a higher gross margin over its Structural Steelworks business. This allowed its gross profits to grow while revenue flatlined.

In FY2012, this trend is likely to continue. As of end December 2011, Specialist Civil Engineering already had a 61% share of its order book value of S$462m.

Not only does Yongnam have an enviable number of projects on hand, the high barrier to entry in the niche it has carved out for itself means that competition now and in the future is quite limited, allowing it to command better margins.

The increased spending by regional governments on infrastructure projects and Yongnam's strong ties with reputable international contractors will probably see Yongnam winning more contracts as the year progresses. This bodes well for the company, especially with expectations of a slow down in private sector demand.

See presentation slides: here.

See press release: here.

Related post:
Yongnam: Smart money is accumulating.

Sheng Siong: A good investment for income?

Last year in August, Sheng Siong's IPO created a bit of a buzz. The company promised a pay out ratio of 90% in FY 2011 and FY 2012 to woo investors and offered shares to the public at 33c a piece. It was 1.3x oversubscribed.

For FY2011, net profit fell 36.1% while revenue fell 8%. Net profit margin declined to 4.7% in FY2011 from 6.8% in FY2010. This is although gross profit margin improved somewhat to 22.1% compared to 21.8% in the previous year. Frankly, I find its net profit margin to be rather unattractive and it actually looks worse than some local construction companies'.

However, delivering on its promise of a 90% pay out ratio, the company has proposed a dividend of 1.77c per share for FY2011. At its last traded price of 48c a share, it translates to a dividend yield of about 3.69%. For those who got their shares at IPO, they would have a dividend yield of 5.36% on cost.

Many invested in Sheng Siong thinking of its business as recession proof and that it is a defensive stock to own. However, its numbers suggest that it does not have much of an economic moat and is not really defensive per se. In fact, the leaner margins have been attributed to keen competition from rival supermarket chains.

Debt free and with more cash on hand, let us see if the company would be able to deliver more value to shareholders in the new financial year. However, for any would be investor, it pays to note that after FY2012, there is no guarantee that Sheng Siong would continue with its 90% pay out ratio.

If the payout ratio were to be reduced to 50% or even 30%, what would the dividend per share amount to then? Would its earnings per share grow fast enough to compensate for the lower pay out ratio in order to continue delivering a similar quantum of dividend per share?

Sheng Siong might be a good place for grocery shopping but is it a good investment for income?

The jury is still out on this one.

See slides presentation: here.
See results announcement: here.

Trading to put food on the table.

I read an article in today's Sunday Times by Goh Eng Yeow on how to sniff out good stocks to invest in. However, I am not going to blog about sniffing out potential winners in the stock market. I am going to blog about something that's probably less exciting: the day trader who wrote to him saying how he lost a big fortune in the stock market last year.

"With mounting bills, and zero financial reserve left, and no job, the current state of mind is like losing a wing man in Tom Cruise's Top Gun. Every day is a challenge mentally and physically to put food on the table..."

I know of friends who have lost big time in the stock market. Personally, I lost a six figure sum in the stock market before as well. It was definitely a nightmare and no one should have to suffer like this. So, can we avoid such an experience?

Well, the only way is probably not to invest in the stock market. As long as we are going to invest in the stock market, we are taking on risks. The idea is to reduce such risks as they cannot be removed.

I think a very pertinent question to ask before we take that first step as an "investor" or a "trader" is to ask ourselves if we are ready. By this, I do not just mean if we have the necessary knowledge required to do fundamental and technical analyses. I also refer to whether we have our safety nets in place. This is even more pertinent a question if we were to be a full time "investor" or "trader".

I know of people who dream of making it big as an "investor" or a "trader". Personally, I am not qualified in any way to say that their dreams are just dreams. Although I do not know of anyone on a personal basis who has become very rich investing or trading in the stock market, there could be people out there who have done so.

However, no matter what our aspirations, embarking on any journey without a contingency plan (or several contingency plans) is a terrible mistake. It would be like going on a sea journey on a ship without lifeboats. Would you do that?

I remember a fellow blogger telling me that if we are making a living from the stock market, we would need to have regular income from the market as frequently as possible. Otherwise, there would be no food on the table. To me, that sounds like having no contingency plan.

So, I replied that "If a person is making a living trading the stock market full time, I expect that he should have a sizeable capital. If he has very little capital and he depends on his gains from trading to put food on the table, a prudent thing to do is to find a salaried job."

If a person has a sizeable capital, he could put it to work investing in stocks which offer decent yields of 5 to 6% or S-REITs which could yield 10% per annum even at current prices. The dividends and income distributions would be a nice supplement to his earned income. Earned income? Yes, don't give up our jobs unless our passive income from the stock market is enough to replace our earned income.

Investing in the stock market need not be a high risk activity. It is only a high risk activity because individuals allow it to be so.

Individuals sometimes put their lives at risk with dreamy ideas of what the stock market is and what they could achieve. Dreams could then become nightmares.

Take it from me. I have been there before.

Related posts:
1. Seven steps to creating passive income from the stock market.
2. Create more passive income with limited capital.
3. How did AK71 overcome his losses and grow his portfolio?