Letter from a Brigadier General.

Slightly more than a year ago, I received a letter that had the words "ON GOVERNMENT SERVICE" and our national crest on the envelope. I had palpitations.

Today, it happened again!

This time, I received a letter from BG Tung Yui Fai of the Singapore Armed Forces.

Enclosed with the letter are 8 pieces of $10.00 vouchers which can be used at more than 5,000 outlets in Singapore! They include petrol stations, supermarkets and F&B outlets!

Accepted at Old Chang Kee as well, I guess I will be having free curry puffs for a while. Yummy!

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Sound Global: Long position at 50c

Sound Global's share price is currently at an important support level. This approximates 49.5c.

I am once again a shareholder of the company with a long position at 50c. I bought some shares towards the end of the day when I saw how the support seemed to be holding up.

Make no mistake, Sound Global's stock is in a downtrend but share prices go down a river of hope and hardly in a straight line. Although no one can say that the stock has bottomed, it could be that it has found a floor.

I see a higher low in the CMF even as share price dipped lower. We see a positive divergence. The MFI does not spot a higher low but it has just dipped into oversold territory. We could be seeing some buying activity as the stock becomes oversold with volume increasing today.

A short white candle with a lower wick formed today. Although not strictly a hammer, after yesterday's black spinning top, this is a promising sign that the downtrend has weakened and possibly coming to a halt. This short white hammer is a reversal signal which would need confirmation tomorrow.

Fundamentally, I like the company's business. I am concerned about its higher financing cost but in spite of this, it is still a very profitable company with very good prospects. The selling down of its stock might have been overdone by Mr. Market.

In fact, EPS is likely to improve in 2013 because of a very strong order book. With China bent on improving water and sewage infrastructure, I expect Sound Global to be a logical beneficiary. Trading at a PE of less than 10x, Sound Global's stock is inexpensive.

With the stock currently in a downtrend, however, for anyone buying on dips, adopting a trading mentality could be more rewarding.

Related post:
Sound Global: Lost 17.2% in a day.

Yongnam: Partial divestment at 31c.

Last month, I commented that I was almost sure that Yongnam's stock would hit 31c per share and this has happened sooner than expected. Today, the stock hit an intra day high of 31.5c.

Technically, I have observed that the share price seems to move in bands of 1.5c. So, overcoming resistance at 31c, we could see share price rising to 32.5c and 34c over time.

Fundamentally, it is not so easy to forecast Yongnam's earnings as it depends on the number and value of projects they might capture in future. There really is no consistent recurring income base which can be used.

However, if we were to accept last year's performance as the worst case scenario and be more conservative, at 31c per share, Yongnam is trading at a PE of almost 9x. It is hardly expensive.

If we accept CIMB's forecast of 5.2c EPS in 2013, then, PE is much lower at almost 6x. Definitely inexpensive.

CIMB thinks 5.2c EPS is attainable because previously delayed projects would be ramped up in 1Q 2013. Various landmark projects are also expected to boost earnings in 2013. (See CIMB's report: here.)

Is share price going higher in the next few sessions? The formation of a long white candle on the back of extremely high volume is very bullish. Share price could indeed move higher but because my initial target price of 31c has been hit, I decided to do another partial divestment today.

After all, to sustain the upward movement in price from here, much higher volume is probably required. Is this likely? I don't know but locking in some gains as price action went parabolic seems like a good idea.

Keep an eye on the momentum oscillators. If lower highs form although share price has moved higher, we would see the formation of negative divergences. This would sound a warning bell although it does not mean that share price would decline right away.

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Yongnam: Investing in infrastructural developments.

Yongnam: Investing in infrastructural developments.

I like what I read in The Business Times today on how Yongnam is leveraging on its core competencies to diversify into investing in infrastructural developments which would generate recurring earnings in future.

This is an astute step in the right direction since Yongnam is already a leader in the provision of structural steelworks, specialist civil engineering and mechanical engineering services. So, they have an upperhand in undertaking infrastructural developments.

Yongnam has, together with JGC Corporation and Changi Airport Planner and Engineers Pte Ltd, looked into possibly submitting a tender for the construction and management of an international airport in Myanmar.

This new business direction and the burgeoning pipeline of infrastructure projects in Singapore to 2030 hint of more vibrant times ahead. Yongnam is, more likely than not, going to be a steady performer and could surprise with better results in time to come.

Dividend payout remained the same at 1c per share despite a decline in EPS. This suggests to me that Yongnam is commited to paying at least 1c per share in annual dividend in future.

I am rather contented to be paid to wait for Yongnam's results to improve meaningfully over time.

Related post:
Yongnam: Declared 1.0c dividend per share.

Article published in Yahoo! Finance Singapore (3).

An ASSI classic was republished in Yahoo! Finance Singapore on 6 March 2013.

The article has, naturally, attracted comments and some of them are eye openers.

I am a frog in a well and can only see a small patch of the sky.

In case anyone is interested in finding out more, here is the link:

Yahoo! Finance Singapore.

To read the comments, simply scroll down beyond the end of the article. Happy reading!

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Article published in Yahoo! Finance Singapore (2)

No free lunch but what about breakfast?

Today is National Breakfast Day and I went to McDonald's to receive a free Egg McMuffin!

There were ushers at the door who directed me to join a queue which was rather fast moving. Within 5 minutes, I received my free breakfast!

Yummy!

Learn more about the event: here.

Know what is good for us (UPDATED).

I was reading the weekend edition of The Business Times and read an article which mentioned a survey done by the Monetary Authority of Singapore more than a year ago on banks and insurance companies. 

It was found that:

1. 50% of investors were not asked about their financial objectives or risk tolerance.

2. 48% of investors were not informed of fees and charges.

3. 40% of investors were not asked about their investment experience.

4. 30% of products recommended to investors were not suitable for them.


Have things changed? 

I very much doubt it.







Why do I say this? 

I still receive cold calls from insurance companies and tele-marketers, representing banks, promoting insurance and investment products. 

Usually, these callers would launch right into why a product had good features, good potential returns and was good value for money.





A call I just received last week from an insurance agent whom I don't know from Adam was a good example of this. 

The caller did not even make an effort to understand me as a client. 

He simply made certain assumptions. 






Although I was unusually patient with him, I finally told him that I would tell him what I was looking for in a product and if he had anything which met my requirements, let me know.

To his credit, before he put down the phone, he honestly told me that he put his own money in REITs. 

I guess he realised that there wasn't a chance that I would buy any of the products he proposed to me. 

Revelation!





Before we buy anything, we have to make sure that it is good for us and how do we know if it is good for us? 

We have to ask the right questions because we cannot depend purely on the goodness of others to do this for us.






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