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Eu Yan Sang: Weight management package.

Friday, May 10, 2013

Ads on slimming pills and courses are plenty. I am always sceptical about them especially when they are not cheap to begin with. However, if they are offered to me free of charge, I wouldn't mind trying. Free. Why not?

Now, Eu Yan Sang is also into the business of slimming! Yes, I didn't believe it myself but it is apparently true.

A Nuffnanger lost some 5.2kg and 10cm around the waist with the help of a physician from Eu Yan Sang!

Anyway, Eu Yan Sang is giving away 2 weight management packages worth more than $2,000 each. So, if you are interested, enter the contest and you might just be a winner:
http://sg.sharings.cc/AK71SG/share/1EYS2013

Saizen REIT: Refinancing expenses reduced net income.

Saizen REIT reported a 70.5% decline in quarterly net income from operations. What investors in Saizen REIT should be concerned with is the permanence of the decline.


Saizen REIT saw a 2% increase in gross revenue, quarter on quarter, but a 15% increase in operating expenses and this led to NPI reducing 3.3%. If the higher operating expenses are the new norm, then, expecting a marginal decline in future DPU makes sense.

The biggest blow comes from "other operating expenses". This saw a 7.5x increase. This was what led to such a big decline in quarterly income from operations. However, remember that this is a one off event.

Basically, Saizen REIT terminated certain loans to refinance under better terms and to extend maturities. Although with the early terminations came hefty costs, bearing in mind that these are one time costs, the REIT has emerged stronger from the refinancing efforts. Why?

1. The cost of refinancing will be recovered in less than two years from interest savings achieved from new lower interest bearing loans.

2. The higher loan to value ratios of the new loans lead to more possibilities in debt funded acquisitions which will up income and, most probably, DPU too.

3. The earliest maturity date of Saizen REIT's loans is now in February 2018.

The pain that comes from such a large decline in quarterly net income from operations will pass because the costs that come from refinancing are a one off event. However, the benefits of the mentioned refinancing are longer lasting and will benefit anyone investing in Saizen REIT for income, all else remaining equal.

A pertinent question would be how the weaker Japanese Yen is going to impact valuation in S$ terms. NAV/unit of JPY18.69 means 22.86c in S$ terms today. So, the REIT is still undervalued, trading at under 20c per unit. However, this is less so than a year ago.

In the absence of yield accretive acquisitions and further improvement in occupancy which has improved to 92.2% on average, it is reasonable to expect DPU to be affected negatively. However, I sense more acquisitions in future and with higher average occupancy too.

Investing in Saizen REIT is buying into a conservatively leveraged play on Japanese residential real estate and a conviction that the Japanese economy will see better days ahead. With the JPY much weaker than the S$ these days, anyone investing for income should temper their expectations in terms of DPU in S$ terms.

See Saizen REIT's 3Q 2013 results: here.

Related post:
Saizen REIT: DPU 0.66c.

Marco Polo Marine: H1 FY2013 EPS up 61.2%.

Thursday, May 9, 2013

One of the numbers I always look at first in the reports of the companies I am invested in is earnings per share (EPS). As a shareholder, how the company performs on a per share basis matters a lot to me.

This evening, I got the positive results that I was expecting from Marco Polo Marine.

Results which were released at 5.38pm revealed a 61.2% increase in H1 FY2013 EPS compared to H1 FY2012. This is over and above my expectations.

With H1 FY2013 EPS at 4.06c, we could be looking at a full year EPS of close to 8c. This means that at today's closing price of 42.5c, Marco Polo Marine is trading at a modest PER of only 5.3x!

To trade at the 8x PER which I think is closer to fair value would mean a share price of 64c! This is much higher than my initial fair value estimate made many months ago which was 50.5c.


Realistically, I do not expect Marco Polo Marine's share price to trade at 8x PER soon. However, a re-pricing to 6x PER does not seem too far fetched. This would put share price at 48c or 12.9% higher than today's closing price.

Now, in my perfect world, tomorrow will see Marco Polo Marine's share price gapping up and hitting 48c. Of course, this is not my perfect world and we can only wait and see how Mr. Market will react to the rather bracing results tomorrow.

Read Media Release: here.

Related post:
Marco Polo Marine: Is this a good time to buy more?


 
Marco Polo Marine Ltd is an integrated marine logistic company which has expanded to become a reputable player in the marine industry in the region.
The Group’s ship chartering business provides Offshore Supply Vessel (OSVs) which are mainly Anchor Handling Tug Supply (AHTS) vessels currently being deployed in regional waters including the Gulf of Thailand, Malaysia and Indonesia, as well as tugs and barges to its customers, especially those engaged in the mining, commodities, construction, infrastructure and land reclamation industries.
The Group’s shipyard business undertakes ship building and maintenance as well as repair, outfitting and conversion services in Batam, Indonesia. Occupying a total land area of approximately 34 hectares with a seafront of approximately 650 meters, the modern shipyard also houses three dry docks which have led to the Group scaling up its technical capabilities and service offerings to undertake projects involving work of mid-sized and sophisticated vessels.

Sound Global: Fully divested once more.

I entered long positions at 50c and 52c because, respectively, I saw critical support levels holding up and because the reversal signal was confirmed. With the stock spotting weaker numbers, I got back in more with a trading mentality.

The question really was when to sell?

Technically, I was not convinced that the declining 20d MA was a strong resistance because I saw low volumes as price hit it and softened. A much stronger resistance, I thought, was at 57c. If you take a look at the chart, you will probably see why I thought so.


Fundamentally, Sound Global had a bad 4Q 2012. Earnings sank some 46%, quarter on quarter, and some 23%, year on year. All said, the company is still very profitable and it is still growing.

Its biggest problem stems from much higher finance costs and although I feel that the longer term big picture still looks good for the company, this will remain a bug bear for quite a while more.

Why do I remain largely optimistic about the company's prospects?

1. Sound Global has a huge order book of some RMB 3b, the largest in its history.

2. Sound Global has more than half of its BOT projects due for completion by end of 2013.

These will increase earnings, everything else remaining equal. Will earnings improve enough to make Sound Global a compelling investment once more? This is a harder question to answer.

Annualising 1Q FY2013's EPS which is, in RMB terms, 4.77c gives us 19.08c for the full year which is approximately 3.8c in S$ terms.

This means that at 57c a share, we are already looking at a PER of 15x for 2013. This would mean that we have hit fair value for the stock. Why?

The company's competition's PER is about there. The historical mean PER of the company is about there too.

If we choose to err on the side of caution, then, this valuation of Sound Global's stock and the looks of the technicals suggest that selling at 57c is not a bad idea. So, with price a bit higher than 57c this morning, I fully divested my stake in the company which makes this the second time in slightly more than two months.

See Sound Global's 1Q FY2013 results: here.

Related posts:
1. Sound Global: Full divestment.
2. Sound Global: Long position at 50c.

Buy direct from Japan with free shipping!

When I was in Japan in December of 2011, the Japanese Yen was S$16 to JPY 1,000.  Today, it is S$12.50 to JPY1,000. This is good news for anyone who likes Japanese goods!

If you enjoy finding great deals in Japan, there is some good news!

"Rakuten Global Market" is an overseas shopping service for the Rakuten Ichiba internet shopping mall and they will hold its first-ever free shipping event covering more than 200 countries and regions around the world for a limited time between 10:00am, Tuesday, May 14 and 9:59am Friday, May 17 (Japan Standard Time). 

Over 1,300 merchants with millions of products from Rakuten Global Market will take part in this limited time offer in which customers outside of Japan and Japanese nationals residing overseas can make purchases like fashion items, bags, watches, cosmetics, health goods, hobby merchandise, toys, games, and sporting goods, and have it shipped globally for free!

Check this out and enjoy value for money offers at:
http://sg.sharings.cc/AK71SG/share/RakutenGFS

Your might also be interested in:
Saving money with low prices and free shipping.

Win a Canon PowerShot N camera!

Monday, May 6, 2013

A Canon PowerShot N camera will be given away weekly to lucky readers who participate in the Singaporeans Get A Grip movement!


Find out how you could win at:
http://sg.sharings.cc/AK71SG/share/getagrip

How to tell if a company is a potential takeover target?

Sunday, May 5, 2013

Sometimes, we see companies being taken over and, many times, at a huge premium. Have you wondered how takeover targets are determined?


Well, quantitatively, one way to determine if a company has the potential to be a takeover target is to look at its Enterprise Multiple. This is a financial ratio that is arrived at by dividing Enterprise Value by EBITDA (earnings before interest, taxes, depreciation and amortisation).

So, to understand Enterprise Multiple, we have to understand Enterprise Value and EBITDA.

Enterprise Value is the company's market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. This is a more accurate takeover valuation than just looking at the company's market capitalisation.

EBITDA is used to evaluate profitability of a company. EBIT looks at operating profits and EBITDA looks at earnings before any accounting or financing adjustments come into the picture.

Put Enterprise Value over EBITDA and we get a ratio. The lower the ratio, the more attractive the company is as a takeover target because a lower ratio suggests that the company's valuation is cheaper.

Of course, each industry has its own norms. So, a low Enterprise Multiple does not make a company a more attractive takeover target if every company in the industry has the same low ratio. If, however, a company has a much lower Enterprise Multiple than its peers, then, it is probably an attractive takeover target.


See the Enterprise Multiple of China Minzhong: here.
See the Enterprise Multiple of ASL Marine, Marco Polo Marine and Jaya Holdings: here.

The above links bring us to a service provided by "Infinancial Analytics" which I discovered quite by accident. I wish to draw readers' attention to the section on "About Market Valuation" at the bottom of the pages.

Although useful, EV/EBITDA is only one approach in valuing a company and shouldn't be the be all and end all.

Related posts:
1. China Minzhong: New substantial shareholder.
2. Marco Polo Marine: A neglected gem.
3. Recommended books for FA.


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