Design Studio Review 2

Yesterday Design Studio announced their Q2 Result.

Q2 revenue decreased 31.2% y-o-y, but cost of sales only decreased 26%, therefore gross profit decreased 52.3%. The statement explained that this is a result of decrease in contribution from both Residential property and Hospitality and commercial segments. The gross profit margin decreased from 20% to 13.8% y-o-y.

The marketing expenses increased by 28.9%, mainly attributed to increase in staff costs relating to restructuring and showroom related expenses. Seems like the company is focusing on marketing, but I couldn't find much media coverage on their showroom.

Overall the result is quite disappointing, after deducting the dividend distributed earlier, Q2 cash inflow is around 1.6 million, which is less than 1 cent per share. Their NAV is only 37.12 cents compared with last year 41.73 cents, and Q2 EPS is only 0.21 cents compared with last year 1.68 cents. If I take FY17(1H) EPS and multiply by 2 to get the FY17 EPS, the estimated EPS is only 1.82 cents. The share is currently trading at around 60 cents, so estimated FY17 PE will be 32.97, and currently PB is around 1.62. I am also quite worried that their EPS is quite low yet their still declared that they are going to pay 1.25 cents dividend soon, which I found is not healthy for the company development.

I found that the share price already reflected the fundamental of the company, so I decided to sell them. Very sad that it drops more than 10% today, so my paper profit drops more than 800 dollars. I sold all my shares today, 600 at 62 cents, 800 at 60 cents, and 10,600 at 59.5 cents (average selling price is 59.7 cents). Anyway I still earned a good profit as I bought my shares at 57.5 cents, and received 5.25 cents of dividend earlier. My return is around 12.9% (dividend included) after I hold it for half a year.

I will still put design studio in my WL, and hope to buy back at a better price.

Thanks for reading

OKP Update 2 and Investment Strategy Review

I was supposed to write this post earlier but too busy. After 2 days evaluation, I decided to sold all my OKP shares at 0.355 on 17 July 2017, which I bought them at 0.43 on 23 June 2017. I loss more than 1k in less than a month! I know I might sold OKP too early, as the investigation is still going on, I still don't want to hold my OKP shares anymore. 

After this transaction, I realized that the research I done before I purchase my shares are not comprehensive enough. I was not aware of the 2015 accident before I bought my shares, which I believed is a very big mistake. Before I purchased my shares, all I can found on Google News was OKP won contracts after contracts, and what I found on their 2015 and 2016 annual reports are the management team cares a lot about the workers' safety. OKP received many safety awards in the pass few years, which made me feel confident with its outlook. However, after the accident I am not that confident about their award winning ability anymore. I understand that OKP is a big road construction company in Singapore, but I am quite sure that Singapore don't have a lot of major road contracts as our land is too small. I strongly believed that if their reputation is good, OKP should expand to overseas market which can generate much more revenue. But now I am not so confident that they are able to win contracts outside Singapore. Even now the investigation is still going on, and the accident might not be OKP's fault, 2 major accidents within 3 years is too much and I think it might even destroy its reputation. I saw the medias are targeting OKP, which might make the situation more complicated. 

After this bad investment, I also did a review on my investment strategy. Is it sufficient enough and can bring my enough return with minimum risk? I found that lack of relevant industry knowledge makes my investment harder. I might miss out many important information from daily news and also the annual reports. Currently I only invest around 8% of my total portfolio in a single counter for most of my stocks, and most of them are in different industry, which should provide some protection to my investment. I shall not invest too much on any single counter as I lack of important relevant knowledge of the industry, so I am using a lot of "I think" when I am evaluating a company, which is no good. Imagine if I invest heavily in OKP, as it looks really good from its order book and annual reports, I will loss another 5 digits hard-earned money! 

Conclusion, bad investment in OKP is totally my fault as my research was not comprehensive enough, and I shall not invest heavily into any counter. Current plan is to slowly reduce my exposure to ComfortDelGro, SIA, and Keong Hong as I invested more than 10% of my total portfolio on each of them, which is not very good from my current point of view.

Thanks for reading.  

OKP Update - After PIE Side Accident

I am very very upset when I saw the news this morning. I have attached the link of the news as below if you are not aware of this accident:

http://www.channelnewsasia.com/news/singapore/collapse-of-uncompleted-pie-viaduct-contractor-recently-fined-9030718

The share price down as much as 8% before OKP requested for halt this morning, but share price is not my main concern with my investment in OKP. I did some research before I bought 16 lots of their shares at 43 cents, and in fact I have to admit that I didn't do my homework properly as I am not aware of their 2015 Yio Chu Kang Accident which happened in 2015! I didn't found any related information on their annual report, and all I can found on Google news before my investment was they win another contract from JTC.

If you read my previous post of OKP, I did mentioned about the company received several safety awards: One is from Changi Airport Group in recognition of their commitment to achieve Zero Safety Infringement for works at Seletar Airport; and the other two from LTA. One is for category 2 for companies that have achieved above 400,000 ACCIDENT-FREE MAN HOURS WORKED, and the other is for the Major Category for Contract ER458. I opened their annual report 2015 and did not found any relevant information regarding the Yio Chu Kang accident too. (If it was mentioned in any of their annual report kindly update me.. but I couldn't find any relevant information!) These information was found in annual report 2016, and there were similar information found in annual report 2015 that shows the company cares for safety. I strongly believed that "safety" is one of the key element that a company must have in their core value in order to grow! Yes OKP won contracts after contracts, but I believed that if they don't care about safety and the QUALITY OF THEIR WORK, there will be a day that they are unable to win any contract anymore! And their strategic plan to expand to other countries won't succeed as I strongly believed that SAFETY is also their main concern too!

I saw some people said that this is a risk when you invest into construction companies, but I believed this is a risk when you invest in any company as long as they hire people to generate revenue for them! Workplace safety is very important!!

I will closely monitor the LTA and MOM investigation. As a shareholder I am very upset to see the company I invested is involved in this kind of accident. Please be serious when it comes to safety..

Design Studio - First Update

Previous article's link are stated as below:
http://allenlowsgx.blogspot.sg/2017/05/design-studio.html

This is going to be my first update after I bought Design Studio months ago. It used to be a very stable counter in my portfolio which don't have much daily transaction, so the price is quite stable. However there are more daily transactions recently and I saw the share price got push up quickly. I attached a daily chart captured on 10/7/17 below:

As you can see, recently the volume are increasing, and we can see white candle everyday. When I checked my portfolio summary on InvestingNote (I like to use it and usually I am lazy to log into my poems account), I saw I am sitting on 10.9% paper gain (dividend received excluded). That's fast profit as all the gains were generated within a week. So here's the new problem, should I sell my shares or not?

When I am sitting on paper loss like Comfort or SIA, I always tell myself its ok to sit on paper loss, as I still believe that the company can generate profit for me in the future. But when it comes to paper profit, I will ask myself, is it appropriate to sell now? If I don't sell now I will worry that in next few trading days the paper profit will all gone.

Then I told myself. See what happened to your YZJ? I bought the shares at 0.81+ and sold at 0.91. I was happy that I earned 10+% quick profit, but what is the share price now? 1.28+! What is that called in chinese? 丟了西瓜撿芝麻. I secured my 10% profit and loss my 50% profit! In fact, my original plan was hold it until 1.2+, however there was the quick profit opportunity and I gave up my original plan to secure it.

I decided to look into its FA again before I do anything about my shares. Design Studio usually works like a subsidiary so I was unable to find much information online. From the first quarter 2017 report, I believed that FY2017 performance should be similar to last year result. I opened last year annual report again to double check the figures. Last year Design Studio total dividend was 6.5 cents, and EPS was 7.88 cents. Design Studio share price closed at 64 cents on 10/7/17, so the PE is still below 10, and dividend yield is more than 10%! I ask myself again, shall I sell it for 10.9% profit and throw away a potential 10+% dividend yield stock? Could I buy back again at cheaper price?

As the free float rate is quite low, in fact I am quite worried that if I sell away my shares now, I won't be able to get it back again at cheaper price. I still believed that a 10+% dividend yield stock is very important to my passive income. If it can generate at least 10% for me from dividend and I don't need to do anything, I should just leave it there to generate profit for me!

Final conclusion - I shall not check my share price too often, it is not healthy for value investor personal development too. Sometimes I will be too greedy and make wrong or not so good decision which will hurt my long term passive income. Remember I bought Valuetronics at 0.4 and sold it at 0.44 for 10% quick profit and now looking at sky high share price and always regret about it. I will not do anything about Design Studio shares at this moment, unless I strongly believe that I can get it back again at much cheaper price!

DYODD.

June Transaction Update

No.	Stock	No. of Shares	Ave.Price	CurrentPrice	MarketValue	%Portfolio
1	COMFORTDELGRO	3,800	2.53	2.3	8,740.00	8.42%
2	SIA	800	10.7	10.06	8,048.00	7.75%
3	DESIGN STUDIO	12,000	0.575	0.585	7,020.00	6.76%
4	LHT	8,000	0.755	0.7	5,600.00	5.39%
5	OKP	16,000	0.43	0.435	6,960.00	6.70%
6	PEC	9,500	0.655	0.61	5,795.00	5.58%
7	PNE INDUSTRIES	5,900	1.06	1.1	6,490.00	6.25%
8	TAI SIN ELECTRIC	20,000	0.44	0.435	8,700.00	8.38%
9	TAT SENG PKG	11,000	0.575	0.6	6,600.00	6.36%
10	KEONG HONG	31,000	0.462	0.49	15,190.00	14.63%
11	CASH	-	-	-	24,676.32	23.77%
	Total	-	-	-	103,819.32	100.00%

I tried to trade less and less these days and focus more on value investment. I just came back from Italy and found that there's one disadvantage for staying in Singapore as an investor. It is too convenient to check the market price! I found that I still cannot control my emotion very well to prevent me to be too optimistic or pessimistic by looking at the price. I found that if I spent too much time on checking the stock price I will think too much and very likely to make decision based on the market price instead of stock fundamental. I am not sure am I doing to correct thing, but my value investment method works quite well now, and my mood won't be too affected by the market price movement.

I bought OKP at 0.43 for 16 lots, and I post an analysis few weeks ago. I also sold OCBC at 10.70 for 0.4 lots as I think the current price is not attractive for buyers anymore, so I decided to exit and wait to buy again at lower price. 

I found that recently Comfortdelgro share price is not performing very well and my paper profit all gone in a very short period. I found that the FA is not that bad, but I am quite concerned about the attitude of the management team as I heard bad reviews from people attended AGM. Based on the chart I think the share price might on mid term downtrend for now, and the market is quite pessimistic on its profitability. I worried that the share price might go very low (below 2). I will follow up with its next 2 quarters reports before do anything to my current holdings. I think if the results not very well or even worse than what people expected, I will reduce my shares to around 3% of my total portfolio. 

That's all for my June transaction update.. Wish we all huat in the rest of 2017!