Monday, August 07, 2017

Surviving vs Thriving

There's a difference between surviving and thriving. When you're surviving, you care only about the bare essentials to maintain status quo. When you're thriving, you strive to exceed and improve the current situation. Both requires different mentality and preparation. I share with you some examples in our daily lives:

1. Taking care of children

I think I'm still at the surviving mode. I feed, shower, change and make sure the baby is alive. But I wouldn't go so far to say that I thrive yet. I'm essentially doing the basic things. Now that I'm used to the routine and the demands of taking care of a baby, I must say that it's getting comfortable. Not comfortable in the sense that it's easy, but comfortable because I'm habituated into the different task and I'm reasonably skilled in the different skillsets needed. It's time to go to the next stage where I thrive. I've been reading and researching on the various things to stimulate the baby so that it will have maximum synapse connections. It will no doubt demand even more energy and effort that I'm currently putting, until I'm used to it, so at least for the initial stages it's going to be hard and tiring.

2. Portfolio

We always think that when the crisis hits us, we're going to make it out of it like Alibaba. But it might not be the case. To survive a crisis is hard enough, because usually more than one bad thing will happen. You might lose your job for example, so are you sure you can put in your investible cash into the market and watching it sink lower and lower and lower? Are you sure you won't need it for other things? To thrive after a crisis, you must be psychologically AND financially prepared for the downturn. You must have psychological and financial reserves. I wasn't prepared in this two aspects the last few rounds, so hopefully I am in the next coming one.

3. Work

We can survive our work by doing the bare minimum requirements not to get fired. But to truly thrive in it, we must put in the extra effort and take the initiative to do things that we are not in our pay grade yet. We do this to improve and also to prove to others that we can take on higher responsibility, which hopefully, comes with a higher pay as well. It might not be just about job scopes, but it could be relationships as well. Are you just surviving on the current relationships with co workers and your bosses, or are you thriving? If you're wondering why others are always getting promoted over you, why others are favoured over you, maybe you are merely surviving in their eyes.




Those are a few examples of surviving vs thriving. But all of these examples have the same underlying commonalities. They are:

1. To thrive, you must first survive. 

2. You must have something steady in your lives before you can take the necessary risk in order to thrive. 

3. You must be prepared to put even more effort and energy to thrive, because the game rules for surviving and thriving is different.


The 1-2-3 steps can be looped in a feedback cycle for improving any aspect of your life. First you learn how to survive. You master the survival skills needed, and after a while you no longer need to think or use much energy. That's when you know you reached steady state. You're ready to learn how to thrive, if you so wish. Not everyone wants to go on the next stage and it's perfectly okay. Next, you need to unlearn all you learned during your survival state and learn how to play the big league game of thriving. After a considerable time, you again reached a steady state where you don't need to expend much energy and effort. That is the new state of 'survival'. This process keeps looping 1-2-3 continually until you stop wanting to go further or you can't master the necessary skills to go up one level or you just run out of life.

How much effort do you need to do all these? Some people count it by hours, so citing some expert out there, it requires about 10,000 hours to reach a certain level of mastery. I prefer it count it by the sacrifice needed. To reach mastery level, you need to be sufficient obsessed over it to sacrifice everything in the midst of learning. Maybe it's called passion, but I find it too vague and over-used. Everyone is using 'passion' to talk about some things that they just acquainted with in the last 5 minutes.

Passion should be defined as wanting to thrive in something by sacrificing your energy and time to the exclusion of everything else. Most people wants the mastery without the sacrifices, and it can't be done. Maybe they don't want it badly enough. Everyone wants to go to heaven, but nobody wants to die.

Wednesday, August 02, 2017

CDL Htrust rights are out

The CDL H trust rights are out. I applied with DBS atm and I've received the refund this morning already.

I don't have any mother shares before the whole rights exercise and before it goes XR, I bought 3000 mother shares at $1.645 each. My entitled rights for this 5 for 1 rights issue @ $1.28 means that I have 600 entitled rights. I applied for excess rights and got 500 shares. In summary:

Mother shares: 3,000
Price of mother share before XR: $1.645
Entitled rights: 600
Excess rights: 500
Total rights: 1,100 @ 1.28

Average price before comms: $1.547
Average price after comms: $1.55411




Since the price of the ex rights mother share is now at $1.610, it's already in the money. Damn, I love entering reits/trust when they exercise rights. Good quality ones will bounce back within months.


Tuesday, August 01, 2017

The 6 Errors in Month-end Accounting

Every first of each month, I'll do my month end accounting for the previous month. This means that I will do a bank reconciliation to make sure that all the accounts are properly tallied and accounted for. Today, when I was doing the same thing I had been doing for years, I realised I had a surplus of $1k. That is, my actual cash that I counted had about $1k more than the amount that is reflected digitally. This is usually a happy problem for some, but for me, any amount more than $50 is a huge major red flag. That means there's some major discrepancy somewhere.


Usually the problem lies with the income part. I must have forgotten to record some cash that I received. In the midst of trying to find out where the error occurred, I discovered yet another major error. I had 3 records of my income, and all three had to tally each month, if not it's another major red flag. Somehow, I had not received cash, but I had in my records that I had received it, and after some investigation and confirmation from the affected parent, I found out the error. It was rectified immediately and all records are tallied now.




This is all thanks to YNAB. If not for that software to do double entry accounting, I probably wouldn't have discovered the error. That brings me to the gist of this post. What are the possible errors that might happen when doing my month end accounting?


1) Error of omission

This is exactly what happened to me. I received cash, but I had omitted the transaction records in my books, so my actual cash holding is more than what my records say I should have. This is quite common. Oftentimes, it'll be some purchase of food or drinks that I had forgotten to record down, but if the difference is only a few dollars, I usually ignore that. It's not a major flag unless it's more than $50.

2) Error of commission

This is when you record things in the wrong account. For example, I draw out money bank A, but I recorded it as bank B. I've encountered this before too, and it's fairly easy to spot. Both accounts will be wrong by equal amount, so a little investigation will shed the light on where the problem area is.

3) Error of original entry

This is when you are supposed to record $11.60 but recorded $16.10 instead. If it's not a big amount, it's actually okay. But if it's a big amount, it's going to be hard to check the records. Especially when there are so many records on food transactions for me. Without the original receipt to counter check, I'll say it's quite impossible to find out, especially if it's cash transactions. Thankfully for bigger items that cost more, I usually use credit card, so there's already a paper trail.

4) Compensating error

This is when you received $500, but you keyed in as $300. At the same time, you also spent $400 from the same account but keyed in wrongly as $300. The positive error and the negative error cancelled each other out. This means that while the balance sheet is balanced, it's wrongly balanced. So far I've not had such errors. Or maybe I haven't discovered it yet...gasp.

5) Error of principle

This is fairly common because of auto-correct in hand phone. Sometimes when I spent $10 in my wallet, it'll deduct $10 from my bank account instead of wallet account. That's an error in principle. Usually a month end bank reconciliation will discover such errors.

6) Error of complete reversal

This is when you are supposed to take out $10 from account A and put into account B, but you keyed in that you take out $10 from account B and put into account A. This is not an issue, because the smart YNAB software will prompt you when such things happen. At least the obvious ones.


Thursday, July 27, 2017

A second that lasted for eternity

There's so many things to take picture of and to take videos of, especially when you have a kid. There are kind advice to take more videos and pictures so that you can remember those special 'first' that happened for your child. I remembered that when I was younger, I don't really have much photos to show for. But at the very least, I have some photos to show for. My parents had a lot lesser, and my grandparents even less so. Perhaps each major milestone, they will have a family portrait or so. Those formal, all suited events to commemorate someone's wedding or graduation. Significant events. These days, we take pictures of every little inane thing that happened in our lives. More is not more. As we have more pictures, each picture takes a smaller share of the significance of the collective pictures taken. It's like the last squeeze of the water colour pastel; it's not enough, so you add more water to dilute it so that you can paint the sky blue. But you ended up with a shade of blue so diluted that it's like a copy of a copy of a copy of the real azure sky.


Does having more pictures mean that the next generation will have much more things to remember their childhood? Not necessarily so. A picture or a video can sometimes distract us from enjoying the moment as it happens. Imagine you are looking up the night sky to watch the national day fireworks. In order to enjoy that ephemeral moment for an eternity, you look away at your pocket, whip out your phone, turn to the camera app and look at the fireworks through the filtered lens of your hand phone screen. That picture you took of the fireworks is not the fireworks you actually experience without the distraction of taking a photo. First of all, it's a series of static pictures and is no where near what you can observe directly. Secondly, even if it's a video, there's the missing boom of the fireworks and the accompanying echoes that reverberate through your whole being, or the strange mix of your sweat and the smell of the smoke as the fireworks explodes up, lighting the night sky. Or the feeling of holding the hands of your loved one as you share this special moment together. It's just different from watching a grainy video taken from your phone.




Before my son was born, I was musing over whether to get a good camera to take pictures and videos of our shared experience. I decided not to, because I know I'm not such a person. In retrospect, and on hindsight, I think I made the right choice. I'm know that I'm not such a person, and I also know that I don't want to be such a person. The former is who I am, but the latter will define my future self and chart my destiny. Choice is important. Even if the everyone is doing it, doesn't mean that I should do it too. Why? Choice.


I'll still take my videos and pictures of my son, who is getting more vocal by the day. I'll still take pictures of his silly grins and videos of his funny times. But those are insignificant moments. For the really significant moments, like watching the fireworks with him under the night sky while holding his tiny hands, and watching his bright brown eyes brighten just as the fireworks exploded into a dizzying display of lights and sounds, I know I won't be whipping out my hand phone. I'll be busy enjoying the moment, soaking in the sight and the sound, and committing it to memory.


When I'm old and my vision fades together with my hearing, I know I'll still be there, holding his tiny hands, watching and hearing the fireworks together, like it's my first time.

Tuesday, July 04, 2017

We all have our own poison

What's your poison?

Everyone has one. For some, it could be expensive branded watches. For others, it could be handbags with Italian names on it. But a poison need not be expensive things too. It could be something that is 'costly' to your free time, like painting or doing models of tanks etc. It's just something you would willingly go to in your free time.

For those who fuel their poison by spending a disproportionate amount of their salary into it, who are we to say that they are shallow and materialistic? They are not spending our money and they certainly not seeking our permission for it. However, I think as part of the bigger financial bloggers group, we tend to disapprove of such wanton spending. You must save a portion of your salary. Oh, you must separate between needs and wants clearly.




But there is another extreme, someone on the opposite side of the fence. Someone who knows only needs and do nothing to satisfy his wants. It's all the future that matters, and all the spending follows strictly according to plans in order to hit this milestone by that age. Maybe for these people, their poison is an insidious one - to be proud of their own frugality by thumbing down on others. It's something that I hate very much whenever people are talking about hitting x amount by y age. They treat savings like a sports, where everyone is competing with each other by subtle hints of how much they can withstand hardship and control their wants. What's the reward? Boasting rights.

I see financial independence as a more holistic ideal though, not just the cold hard math. To really reach financial independence, you must be free of money. Usually people take it to mean that they have all the money they need for their expenses without having to work ever again. But I think being free of money means we no longer treat money as a symbol to accumulate, to show off, or to satisfy some inner psychological needs, but to see it as a means to exchange it for something that serves a greater good. In that sense, a millionaire who holds his money so tightly is as equally shackled as a indebted man who spends all his money on material goods. Both are still controlled by money, but each is satisfied by different aspects of money, with the former treating money as a security blanket and the latter treating it as a power and status symbol.

Some people are so poor they only have money.

But let's get back to our poison. I used to spend quite a lot of money buying guitars and amps. I'm not that good enough to justify those purchases, so I inherently know it is wrong. After dabbling with it so some years, I hardly touch them now and they are all lying in cabinets and shelf, acting as re-purposed dust collector. Oh, before that, there was a gaming phase where I spend a lot of money buying sega games. Back then, I thought that if only I could have more money, I could spend the whole day gaming away without a care in the world. Little do I know that years later, when I have the means to fund my gaming adventures, living vicariously as an elf or a wizard blasting away at demons that threatened to destroy the world, I no longer have the time to play. How many years of my life had been spent chasing digital gold coins and collecting unique, digital swords, staves and shields?

While I don't regret the time and money spent on such poisons (oh, they are such joy), one must wonder what is it that I do love so much currently that will inevitably walk down the same path as my old sega games and my dust collecting guitars?

Do I want to continue doing it now, knowing that my passion for it might run out in the future? Or should I abandon it and embrace minimalism? Could minimalism be, by itself, a re-purposed dust collector in the near future?

That is a thought worth thinking about. Perhaps, like all medicines, the dosage makes the poison.

Wednesday, June 28, 2017

Bigscribe mega event of the year: Investors Exchange 2017

Bigscribe is having a mega event, called Investors Exchange 2017, this July. Those who know Bigscribe and had attended their value for money talk would know that everyone takes away something of value from attending the talk, so this mega event is no difference. Here's the line up of the speakers and their topics:

Teh Hooi Ling - Strategies for successful equities investing

She is a former SPH journalist and author of the "Show me the Money" series. She has her own fund now, called Inclusif Value Fund. I read her books and loved her articles on straits times, and found her to be sensible and always a delight to read.

Xeo Lye - Identify market trends the George Soros way (writes on Xeolyenomics blog)

I know him as a great runner and the designer and founder of the financial/economics game Wongamania. He is a macro person and has very deep knowledge of economics and how to apply it to investing on an individual level.

Vina Ip - 7 Deadly sins of Singapore property buyers (writes on Propertysoul blog)

If you want to find out about properties, she is the default blog to go to. She has many years of experience and offers great advice on everything related to property. Can't go too wrong if you are interested to learn more about property.

Joel Sim - Master your mind, master the market (writes on mrfinancesavvy blog)

I know him as a equities broker and is a great trader. He will share with you about his craft as a professional trader and what are the things we should look out for. His years of experience in his field makes him someone that I will listen to.

Christopher Ng - 50 Shades of dividends investing (writes on Tree of prosperity blog)

What a sexy titillating title. He is very much himself over here and he shares actual experience with his status as a financial free man. Chris always do his research and shares it with folks who attends his talks. It can be controversial and unconventional, but I guarantee it will definitely set you thinking.

Kenny Loh - How to use the 3 musketeers of REITS to find strong REITS (writes on MystocksInvesting blog)

I read his blog for so many years now, and he runs a REIT investing course for a while. Here, he will share with you how to avoid common mistakes that REITS investors make and introduce a very simple and free tool to cut down your REIT research efforts.

Elvin Liang - The Art of Scuttlebutt (writes on epsilonluxe blog)

Ex-banker, current remisier. I think he is one of the few who applies both FA and TA to his investing. Here, he will share with you about scuttlebutt, a concept first introduced by Philip Fisher. If you want to know how he applies it to investing, you might want to hear what he has to say.


With this kind of line up, I think you don't come to the talk with just a cup of Starbucks. You come here with redbull laced coffee, a pen and notepad to write notes! The details of the event you can get by clicking on the picture below:


The key details are listed here:

Date: 29th July 2017 (Sat)
Time: 1pm to 5pm
Venue: DBS Auditorium, MBFC Tower 3, Level 3
Price: $65 (regular), $49 (early bird fee)

The early bird fee of $49 represents a near 25% discount from the regular price, and it will end in about a week on 8th July. So book your tickets fast. Don't just spend $49 on a good lunch; spend it on some mind food as well, lol

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
========

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.

-----------------------------------------------------

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. 


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