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CAPITALAND....... Land of Capital Growth


CAPITALAND
Investing in Capitaland was one of my most memorable journey in 2019. Capitaland is listed in SGX and is part of STI index component. It's main business units focusing on investment properties which generating recurring incomes from rental and trading properties as developer in major cities like Singapore, China and Vietnam. You can google it to learn more about Capitaland.



Headwinds....
The share price had been depressed for some time between late 2018 and early 2019. Singapore and China properties cooling measures had dented investor's confidents in the company's prospects. It is because the majority of its investments are concentrated in China and Singapore, more that >75%. It's gets worst with the on-going trade war between China and US.



Investment journey.....
I saw a window of opportunity here to make an investment. Looking outside the window, many see storms approaching and raging winds . What I saw outside was a rainbow beyond the horizon after the storms cleared. And that was how the journey started. Accumulating at low pricing between SGD3.00 to SGD3.30. Continued this journey until I had exhausted most of my SGD funds in my trading acc. It was partly because I also accumulating huge positions in REITs at the same time. You can read my previous posting on REITs investing if you interested to know more. Yes, there was a huge risk in the horizon, but I had never regret making this journey.



Tailwinds...... wind of change
In Jan 2019, the rainbow finally appeared. Temasek announced the merger of Capitaland and Ascendas-Singbridge. This deals will see Temasek injecting ASB asset into Capitaland and Capitaland to issue new share at $3.50 to Temasek. This announcement helps to boost the share price and confidents in the market.   



At the end of the journey.....
I finally decided to lock in profit at $3.50 per share, net profit of $18,65511% return in 5 months journey. As you can see in the chart above the share price continued to appreciate after I sold. I have no regrets because I can always embark a new journey in this investment world.

Personal notes:
I viewed investment as a journey, not just the end goal of generating income. You need to have the PASSION in what you do and I really enjoy the whole process of investing from early planning to execution. Regardless if I really make or loss money in the journey, I will make sure it's a memorable experience that keep you going. That is the part of my life's journey that I enjoyed the most. PASSION!

And that is my investment journey....

-William Cheng       

                                      Just completed watching this Drama recently. Enjoy!

KEPPEL KBS US REIT...... Take the JUMP!

One of the popular investment class in SGX is REIT, Real Estate Investment Trust. It's typically provides stable and low beta stock price swing, sugar coated with consistent dividend payout. I probably should have invested more in SG REIT than speculating in stock market. However, those "Branded" REITs (Prada!!) which backed by heavyweight cornerstone sponsors are mostly trade at full book value >0.9 P/B and low dividend yield <6%.



This week, I would like to write about Keppel KBS REIT which recently changed name to Keppel Pacific Oak US REIT. This REIT was issued for USD0.88 at IPO. Traded around this price for sometimes until the share price start to tanked in late 2018.

2 key reasons for the fierce selling:

1. Fear of possible US tax withholding Law changed could impose 30% tax on its profits.
2. Greatly discounted Rights issue at USD0.50 to purchase new office building in US.



This REIT's price dropped from USD0.85 to USD0.54 lowest point in very short period of time. At this price, the dividend yield will exceed 12% return. Very attractive investments return especially the Right issue which allowed you to acquire more share at discounted price to book value. With Keppel as the cornerstone sponsor, I'm confidents that it's a very safe investment and the opportunity won't come twice in your lifetime.

What I like about Keppel KBS REIT:

1. High dividends yield >12%
2. Good sponsors > Keppel & KBS
3. Right market and strategic locations - US companies are growing a fastest pace support the demands for office space.
4. Super cheap rights issue - Like buying TESLA model X at Cherry QQ pricing.

I started buying between 58 cents and 64 cents. I had fully subscribed to the Right share and applied for Rights excess at USD 0.50. I got the full allocations plus excess share due to many not willing take the risk to invest. Including the Rights share and dividends received, my average price come down to USD0.53.



Fast forward to 2019, Keppel KBS US REIT issued a statement and clarify that they expected no tax impact as a result of the new US tax regulations. This immediately cleared up the risks hanging, the share price immediately recovered from 0.54 to 0.64. I sold it later in March 2019 at USD 0.68 with 23% gains in profit for 5 months holding period.

I admit that I make a big mistake as later it hit 80cents highest few months after I sold. Currently the stock trading at 74cents. But I'm glad I took the courage to "JUMP"  when others rush for the exit.

     "Taking a calculated investment risk is like taking a bungee jump with safety harness"-WC




I end this blog with my favorite song by G.E.M. "LIGHT YEARS AWAY". Enjoy.

- WILLIAM CHENG




Stock name: KEPPEL KBS US REIT
Country listing: Singapore
Research periods: 2 weeks
Stock accumulation/holding periods : 5 months
Return on investment (ROI) : 23% in 5 months 
2019 Stock ROI ranking: 5th (biggest gains)
     

Keppel Corp....... The Pheonix rising. Thank you, Temasek.

Making an investment usually take a lot of efforts and time to research a stock before I take the plunge. I have a long checklist that I use as benchmark to grade the company (What to buy) and to determine the right entry price (when to buy). This is to ensure the reward is always outweigh the risk I take. If you followed my blog closely, you should be very familiar with my stock pick's criteria.



Keppel Corp need no introduction, one of the biggest conglomerate listed in Singapore. Since last year, its facing multiple headwinds from bribery scandals to falling oil price. Since then, Keppel had make multiple restructuring to move away from oil rig and ship building into properties and data center business. However, the share price continue to depressed as investors doesn't like the short term volatility.

What I like about Keppel Corp:

  1. Market leader - holding top position many of its key business in SG including O&G, properties and DC business.
  2. Right market trend - Data Centre is the core infrastructure that enable cloud computing, AI, machine learning and industry 4.0. 
  3. Good sponsor - Temasek is the biggest shareholder with 21% ownership.
  4. Transformation mode - many initiatives taken by Keppel transforming its business to achieve high ROE. However, it takes time and patience to see the returns which many investors doesn't have. 
  5. Crisis mode - with so much negative news surrounding this stock, the price had reached rock bottom. This is what make me even more excited to invest.        

I see this a great opportunity to buy a great company at a fire sales pricing. This is the "cigar butts investing" analogy popularized by Ben Graham. I am a big fan of his investment technique. Keppel hitting the right tune and the right price for me to take actions.

I started buying Keppel shares right before the Q3 2019 earning announcement. As usual, they announced poor results with 30% dropped in profit. Market panic with another 15cents dropped after announcements. While others running away from Keppel, I saw this as "once-in-a-lifetime" opportunity to accumulate more.



On Oct-21, Temasek announced to buy 30% of Keppel at $7.35. The last traded price for Keppel was $5.84. The deal will boost Temasek’s stake in Keppel from 20.45% to 51% and also imply a premium of approximately 26% over lasted traded price $5.84.

Last Friday closing price was $6.91 and I'm still holding on to my stock with a paper gain of 20%. I plan to hold this for longer term to enjoy the benefit of the on-going restructuring happened at Keppel. I can really see the "Phoenix is rising with second tail wind" from Temasek.

-William Cheng



Stock Investing Performance Matrix (SIP Matrix):

Stock name: Keppel Corp
Country listing: Singapore
Research periods: 6 weeks
Stock accumulation/holding periods : 3 days
Return on investment (ROI) : 20% in 5 days 
2019 Stock ROI ranking: 6th (biggest gains)




     

Jardine Group ......... Dark force raising

To make an investment, you need to make 2 very important decisions. What to invest and when to invest? If you invest in the right stock but wrong timing or right timing but a wrong counter, the outcome can be disaster. But the former is much better as you can wait out the storm. I always think the best stock to invest are those with right market trend, positive cash flow and market leader with strong moat. The best time to invest is when the company hit the speed bumps or in crisis mode.

What to invest?
1. Company with right market trend
2. Positive cash flow (not only profit/loss statement)
3. Market leader with strong moat

When to invest?
company in crisis mode

Recently, the companies in Jardine Group caught my attention. Most of the Jardine components are in hitting year low as the Hong Kong protest gaining momentum. Their business exposure to Hong Kong is quite significant especially HongKong Land with 80% asset located in Hong Kong. The Jardine Group are quite complex and most of its subsidiaries as part of the 30 companies that formed STI index components. Here is the chart that show the complex companies web in Jardine Group.



Listed companies of Jardine Group in Singapore:
1. Jardine Matheson
2. Jardine Strategic
3. Jardine C&C
4. HongKong Land
5. Dairy Farm
6. Mandarin Oriental

The focus will be the top 4 companies above. 52 weeks charts below showing all 4 companies hitting rock bottoms.









Remember, it is hard to get a good companies reasonable price due to supply and demand equations. You can only find valuation at reasonable level when the crisis hit. The opportunity is rare but it can present potential in huge capital gains when the dark cloud finally lifted. I viewed the situation in Hong Kong just a temporally setback, it will be resolved soon with time.  I have said enough and it up to you to make the best out of the opportunity out there. Good luck!

- WILLIAM CHENG

Disclaimer: All investment come with great risk and should proceed with cautious. This is not an advice to buy or sell any stock. It is important to do your own research and analysis before making any investments.







 

2018 Malaysia Election...... the death star of my WIN-ning steak

Malaysia election 2018 was a turning point in Malaysia's political history. For the very first time, the ruling party Barisan Nasional which ruled since the formation of Malaysia defeated in the election. It is also marked the end of my WIN-ning steak of my trading profit since 2015. While the whole Nation "cheers" for changed in leadership, I "cried" 😭 of defeats for my investments.

The chart below shows the dramatic dropped in KLSE index since 2018 election, as compare to the roaring success of Dow & SP500 index hitting record high for the same period.



I had tabulated my trading profit/loss in KLSE market for the past 5 years in the table below. During the peak of my trading, it registered close to RM80,000 in net profit based all my closed positions in 2015. I suffered post-election loss of RM28,000 up-to-date. A wind of changed in fortune.



After election, my stock holdings in Malaysia took a big hit especially those counters that had a closed link to previous Government and its business prospects depending on Govt's contracts. Mega projects were put on-hold or cancelled. Drastic dropped in Govt spending to reduce debt and foreign investors pulling out billions of dollars from MY stock market in lack of good faith.     

 There are some meaningful lessons to take away from my "misadventure" listed below for you to ponders. 

1. Beware of major world events that might have great impact on stocks like e.g elections, Brexit, trade war, Quantitative Easing (QE) or monetary policies.
2. Plan ahead in anticipating a change in the world events. Managing the risk/reward scale as the world event unfold. You can decide to increase, reduce or sit on the fence your portfolio.
3. Strategies adoption has to change with times especially when world's events unfolding. The trading strategies that you deployed today may bring great success in the past but won't guarantee future performance. Not even a great fund manager can guarantee that! That is why a disclaimer stated "Past performance is not indicative of future results" in any funds' statements or marketing brochures.
4. Cash holding is also a great strategy while you scope for new opportunities. Many thinks that cash holding is not an investment strategy as it doesn't generate profit, I bet to differ.
5. Admit one's mistake and cut loss when the tides turn is your life saving vest. My greatest mistake during 2018 Election was not holding enough cash and fully vested in KLSE stocks even though the market is changing direction. Too proud to admit my mistake and take the loss during early part of the year. 



I always had better luck investing in other markets (SG & US) as compare to MY. To keep my investment portfolio diversified, Malaysia market is always capped at 10% as compare to US 50% and Singapore 40%. I plan to maintain this ratio in the near future until I can formalize a better strategy in this market.

This year, I changed my investment strategy for Malaysia market. As you noticed in table above, my investment decisions were dominated by small cap counters, mainly influences by rumors and tips provided by other online postings. I want to stay away from it for now and focus on stock counters that have distinctive qualities. Still work in progress, I will reveal more in my future posting when success start to roll in again. 😊     



- WILLIAM CHENG

Looking for opportunities during Market crisis

Taking a break from my normal investment journey posting, I would like to share my thought on the current market condition and hope you too can decide on your next trading plan.

The market is now full of fear. Everyone is talking about the recession coming by judging from the inverted Treasury yield curve where the 30 year Treasury bond cross below short term 2-year notes. Never ending protest in Hong Kong and poor GDP readings adding to the flaming fears that spread across the globe.



Human tend to have very short memory retention period when come to investment. Early January 2019 we faced the same situations where the recession fears gripped causing 10-15% correction in market worldwide. By April 2019, everyone was cheering for recovery and record earnings sessions pushing the Dow index to record breaking closing.

In just short 3 months, all the fears was forgotten and recession was taken a backseat. The frenzy buying and chasing stock price to the peak. And now in August, the same recession fear crawled back to everyone's mind again. The market got hammered badly for past week and it is forecast to remain on correction mode for next few months.  

My 2-cents thought:

Fear not, take this period of human madness as an opportunity to scout for great investment idea. My advice would be not to join the majority crowd of frenzy selling, take the path that less travelled.




By going against the current, take the following advice in sequence if you have the heart of steel:

  1. Stay calm  - nothing good come out from panicking, you may make mistake you would regrets later
  2. Review your portfolio  - housekeeping, get rid of poor quality stocks, raise as much cash as you can to ride the next market bull.
  3. Do homework - study the market, identify good quality company.
  4. Take Calculated risk - perform risk analysis of a stock. How much risks versus returns you willing to shoulder.
  5. Cigar butt investment Strategy- Buy a dollar value company at penny valuation.
  6. Get your hands Dirty  - Set your investment plan in motion.   
If you can execute this well, you will be very successful in investing. All you needs are the star, moon and sun to align with your plan, and I think the timing is right.

- William Cheng

Disclaimer: All investment come with great risk and should proceed with cautious. This is not an advice to buy or sell any stock. It is important to do your own research and analysis before making any investments.





GLP.... Make rumor your best friend

Market gossips can be very rewarding if it turned up to be true. Like winning the jackpot provided if you risk to take the bet. All you need are some market analysis and some patience to wait for the Lady Luck to be on your side.

Stephen king once said ' There will be no gain without risk."


Global Logistic Properties (GLP) is a leading provider of modern logistics facilities with a US$38 billion portfolio comprising 53.7 million square meters of logistics facilities across China, Japan, Brazil and USA. Listed in Singapore at $1.96 per share since 2010.



There was rumor started circulating online about possibility of privatization and the share price jumped to $1.90. Since it listed in 2010, it have hardly trade about its IPO price. I read about the rumor and I got very interested about this counter. I begun to study the company's profile and I came to a conclusion that this company was a real value "BUY" even if the rumor turn up to be false. It was way below book value and under appreciated by investors. It should worth at least $2.80 and above per share based on my opinion.

 The positive attributes that I like about GLP:

1. Market leader - huge portfolio of properties with modern logistic, high demands from the blooming e-commerce.
2. Right market trend - Part of the critical components of modern e-commerce, warehousing for semi and finished products, last mile delivery solutions.
3. Below IPO - it was trading below IPO price for many years even as the profit grows over the years.
4. Good sponsor - total 10 cornerstone investors including Singapore GIC during IPO.



So, I initiated my trading plan on GLP. I started buying at $1.96 and continue to accumulate until it hits $2.50. I set my target to sell above $3 or wait until they announce the buyout deal. Waited patiently riding the share price uptrend for many months as the rumors spread like wild fire.

In July, there was a sudden dropped in share price, more than 10% in an hour period due to rumor that the privatization failed. Honestly, I'm really felt the pressure and wanted to run for the exit. I had so much gain from my entry that I felt I need to take some profit out from the table. So, I sold about 10% of my holding before GLP suspended from trading pending announcement just to manage my risk.

The announcements come in 1 week later turned up to be heart lifting event. They announced a record S$16 billion privatization deal offering price at $3.38 per share and the deal closed on Jan 2018.

With this deal concluded, my trade on GLP net about $19,700 not inclusive of dividend paid out for that year. Investment period of 8 months and the investment return rate (IRR) were >30%.


- WILLIAM CHENG

Green Investing..... making impact with your money

Recently, I watched a documentary titled "An Inconvenient Sequel: Truth to Power " by former Vice President Al Gore. This film is about making an impact on climate through government supports on  policies change and corporate's responsibility. Really good enlightenment  movie and I would encourage everyone to watch it if you really care about Mother Earth.


I'm not going to give a long lecture on climate change here in my blog. I will let the movie do all the talking. So, what can we as investors do to make a different for our environment? The answer found in "Green Investment" or "Eco-Investment" which gaining popularity in recent years.

           Eco-investing or green investing, is a form of socially responsible investing where investments are made in companies that support or provide environmentally friendly products and practices.





Putting your hard earned cash in companies that invested heavily on environment initiatives doesn't means it will not be highly profitable. Looking back at my past investments in those companies that give me some of the be best returns. Plus, you will gains more than just dollars in long run. The keywords is "Sustainability" for long term. Some examples of my green investments:

Starbucks - plans to create 10,000 eco-friendly stores globally by 2025, eliminate single used plastic straws by 2020, support sustainable coffee beans farming.

Apple - target zero carbon footprint with 100% renewable energy, design products with highly recyclable.

Capitaland -  ranked in the Global 100 Most Sustainable Corporations in the World index, 93% of CapitaLand’s buildings has a Green Mark Gold rating.




Of course, I did invest in companies that not so Eco-friendly in the past which I had regretted. Some of the energy hungry, polluters, high carbon footprint companies like SembCorp, SembMarine, Sumatec and Noble. Moving forward, I will avoid investing in those companies and allocate more capital funds for green investments. I encourage you to rethink about your investment's objective and do your part as "socially responsible investor".

Here, I would like to end the posting with one of my favorite song " Don't Be Afraid" (Fist Fight theme song) - by HANA. Enjoy.

- WILLIAM CHENG WL




Alibaba...... Treasure Cave Looting continue 2018

Alibaba continued to be my favorite "treasure Cave" in 2018. However unlike in 2017, I'm very conscious about BABA high share price. After a good 100% run up from base $90, this stock is no longer considered "under value" based on my assessment. Hence, I deployed a totally different trading strategy for this time. I don't feel "Buy and hold" trades will be the right strategy as compared to my old trade in 2017 (Refer to my previous posting on Alibaba). My "short term swing" trade strategy kicked in early 2018.

I had make several short term trades from Jan to June 2018, whenever I felt the price was right at that moment. It turn up to be right calls to loot this "Treasure Cave" again and again. Within 6 months, my trading profits net at $18,997 after minus commission.

After June, I stopped making new trades on this counter and took a break from the market. There was a shift in the macro economic conditions, trade war heating up and the market indices were reaching its peaks. I was hoping for a market correction to happen. Mr. market presented a great opportunity to trade again when the correction really took place in Nov/Dec. Without hesitate, I "ransacked"/buy call on this Treasure Cave again at end of 2018. I will write about this on different posting later. 

 " Having a clear "Exit" strategy is the most important plan that every investor should know before making new trade."

I will write about Singapore Market on my next posting.

-WILLIAM CHENG WL



  

Alibaba....... Great "Treasure Cave" Discovery in 2017

Most of us may know this story as Alibaba and the 40 thieves. How he discovered a cave full of treasure. Below is the story recap from Wiki:

One day, Alibaba is at work collecting and cutting firewood in the forest, when he happens to overhear a group of 40 thieves visiting their treasure store. The treasure is in a cave, the mouth of which is sealed by a huge rock. It opens on the magic words "open sesame" and seals itself on the words "close sesame". When the thieves are gone, Alibaba enters the cave himself and discreetly takes a single bag of gold coins home. 

Well, I did found a "Treasure Cave" through my investment journey in 2017. The cave called "Alibaba", a NYSE stock listing with ticker "BABA". I got interested in this stock after watching their single day gala 11.11 events. Since listing in 2014 around $100, this stock hovered below $100 for sometime in 2017.

I noticed this company has a very high growth rate >50%. It had been very consistent in net profit growth year over year. The characteristic I like about this company is the business model and the economic moat they build around their core business. Their business model which focus on B2B and B2C online e-commerce are the future trend with great potential for multi year growth. Looking at what Amazon did to US marketplace, you know Alibaba's valuation is compelling. Alibaba has a strong economic moat which no one else can challenge their dominance for very long time. They are no.1 in China and the next biggest competitor is miles apart in comparison and not profitable.

So making the story short, the quality attributes that I like about Alibaba are:

1. Right business model at right market trend
2. strong economic moat - King of the jungle
3. high growth rate, >50%
4. Low PEG ratio <1.0
5. Very profitable, positive cash flow



I know Alibaba is unappreciated by the market and I should grab this opportunity uncovered this "Treasure Cave" before others do. I started buying Alibaba (Shout "Open Sesame") when it dipped below $100 and continue to accumulate more along the way. The share price continued to move in upward trend as they started releasing positive results and forecasts in their quarterly earning.



I set my exit plan in motion when the share price hit above $170 to $180. I felt the share price had risen so much that it had outrun its potential earning growth. The PE ratio expanded too fast. It was time to sell and looked for other "Treasure Cave". So, i finally called for "Close Sesame" by the end of Nov 2017.

With the share price increase almost 100% since I first started investing, I make a nice return on my investment for a period of 10 months. This was one of my best "treasure Cave" I ever discovered for that year.

- WILLIAM CHENG WL










         

Facebook 2018....being poked?


Investing in Facebook had been one of the most interesting event this year. From U.S election scandal, data privacy leaks to catastrophic earning forecast creating a roller coaster ride in share price. this ride is not means for "faint-hearted". So, hold your breathe and be thrilled......















Facebook is the lowest PEG ratio among FANG stocks in the beginning of the year. This company have great business moat in their own turf and competitors are non existence. The only social apps that gaining tractions is Instagram. Instagram is so popular among the millennial, however FB has nothing to fear, Instagram is part of FB's lunch menu.

Facebook as a company with great attributes:

1. Market leaders
2. Economic moat
3. high positive cash flow
4. no debt

Based on my conviction, I projected that Facebook will hit at least $200 by April when they announced Q1 results. I started to accumulate the stock between $178 and $184. After massing a huge positions, now I waiting for my lunch to arrive. But then, bad news comes.... the US election and data privacy scandal surfaced causing the share price dropped very fast. Within 1st week, it dropped 10% and following 2 weeks it hit the low point of $149. At this point, my losses already hit more than >USD10,000.














I was too slow to response to this new developments. Regardless, I noticed there was no fundamentally changed with the company's ability to generate great profit. I'm stayed with my conviction not to cut losses as I'm confident that it will recovers when the dust settles. True to my predictions, the stock start to recovers after Q1 earning announcement. I decided to par down my holdings between $178 and $195 to make a small profits.

This events had damaging effects on my psychology and ego as well. A great lesson learnt. Even if you have done your homework and you convince thing could never goes wrong, there are still many unpredictable events which beyond your control. The only thing you can control is your response to those unforeseen events. And for the records, Facebook continues with its bullish charge hitting $218 as I predicted early this year, and then stumbles back to $170s. As I looked back to this trades, I'm hoping to make a wiser moves in the futures. An epic lesson learnt in 2018.

- WILLIAM CHENG WL

 



         

Discovering the first Pot of Gold.....

My investment journey begins when I bought my very first iPhone. It was an iPhone 3G in 2008. I couldn't understand why army of fans willing to queue up weeks ahead of iPhone launched year after year. As I dig deeper into the company's background, I was amazed by the founder, Steve Job. How he saved the company from the brink of bankruptcy and turn it into the world biggest corporation.

I'm truly converted since then. However, I did not put my first dollar on the table until many years later. From 2008 to 2012 was my investment's dark age period. I did not dare to venture into the stock market as I'm still trying to decipher the 2008 financial crisis. In 2013, I muscled enough courage to make my first investment in Apple Inc. at around $480 before 7-for-1 basis split. After the split, the cost will be closer to $68. What happened next went down in history ..... as my 1st Pot of Gold.

   













I will leave the details for my future posting. In this blog, I will share my insight of my stock selections. How I select stocks to buy, the rational behind the stock selection. The timing of entry point and the reason for exit. I will share my principle and rules for investing as a journey, both winners and losers in investment decision. My stocks search mainly focus on 3 markets in Singapore, Malaysia and US. 

I hope you will find this blog inspiring as you begin your own investment journey. I will end each of my posting with a lighter notes, a selection of my favourite music collections. 

Have a good weekend and happy investing.

- WILLIAM CHENG WL


"Not Good Enough" by Tia Lee

CAPITALAND....... Land of Capital Growth

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