Bumpy ride

This year, I tried a couple of new things besides investing in stocks.

Well, to side-track, I have not really purchased any REIT stocks at the moment. I felt that having a little bit of exposure to high dividend yield REITs might be good, however I am still undecided given the slowing rental / lease market for the industrial and retail sector. I would like to get into healthcare REITs, but I do not find First REIT and Parkway Life REIT undervalued at the moment. Still, the dividend yields look tempting.

Ok, back to the new things. With all new things, there is always a certain amount of risks.


This post is about the difficulties / failures I encountered. This is not a post to tell you how much profit I made from any particular investment (since I first invest in them).

Ok, the new things I tried this year:


P2P loans and Invoice Financing.

In the case of P2P loans, I have my fair share of loans in arrears. I started investing sometime near the beginning of 2016. The worst case now is a loan from the platform Funding Societies (FS). See below for the recent email from FS.


I reckon the chance of getting back the remaining amount owed to me is very remote. In retrospect, the loan detail sheet did show a relatively high level of liability (however, it has actually decreased significantly from the previous year). Profits have been increasing over the past 3 years. So there is really very little clue of the impending liquidation.

This default has erased a large part of the accumulated interest I have received from the loans and invoice financing I participated in. Overall still a net profit but substantially reduced.

Occasionally, I would receive emails from the platforms informing me that they have been hounding the SMEs to pay up and sometimes they would have some success in receiving a partial payment. They might mention the legal terms in the contract (which they conveyed to the borrowers (and possible litigation route) or if they have engage money collectors.

Often the SMEs have difficulty in obtaining timely payments from their clients (even statutory boards). Or they choose to pay their employees first rather than settle the loans.

All these do not sound really reassuring if you ask me.



Amazon  FBA

I am still at the “liaising with Chinese Manufacturers / suppliers” stage. Basically my first attempt at doing a sample (with private label) is a failure.

The printing done by the Chinese manufacturer has errors. So end up 1000 copies of the package are made redundant (cost courtesy of me). Although the damage is relatively low, but still it is an unnecessary waste.

After all the coordination and paper mock-ups, the final printing came up with unexpected errors.

It is pretty time consuming liaising with Chinese manufacturers.

The recent issues encountered:

  • 1 week holiday in China (1 to 7 Oct). Halfway through liaising with the manufacturers, I was told by all of them that they will be on leave. So I had to wait patiently for them for approx. 1 week (some of them did start work on 5 Oct though) to reply my queries.
  • They don’t entertain small quantities. To lower the risk, I always try to negotiate for lower MOQ (Min. Order Quantity). However, manufacturers typically want higher MOQ for obvious (more profitable) reasons. And some can be quite sarcastic.. and consider you a small fry (when they have bigger clients to go after). Some of them are suppliers and often they come back and tell you that the manufacturing side does not agree with the low quantity.
  • Samples: Sample with individualized packaging is not cheap and typically you need to meet their MOQ and agree to the bulk purchase before they agree to do customised packaging or stickers for you.
  • Everything is in USD. Sending a sample over can easily cost min USD 40 (just on delivery cost alone). A few dollars here and a few dollars there can add up to a lot, as all these are in USD. After you convert these to SGD (1USD = 1.39SGD), the cost can be quite significant. Sending to USA also involve duties and freight charges. And if you don’t prep your product properly, Amazon will slap you with a fee to do the prepping for you.
  • Getting a good package design and logo design done is time consuming. Yes Fiverr.com is a great site, but if you initially reject the first design, the designer typically takes a long time to come back with a revised design (they are after all not paid much). After some time, I gave up and just do simple packaging designs myself (still faster than waiting).
  • What was communicated initially with the manufacturer is wrong after you’ve paid. For instance I asked for 4 different colours of samples, but after I paid, I was told that only certain colours are available etc. And it is not easy getting them to refund you.
  • Time consuming process of getting quotations, getting shipment cost, agreeing on quantity, agreeing on doing packaging with customized design etc… and on top of that, sometimes the agents go on a couple of days leave. And you had to wait for their quotations to complete your assessment (together with the other quotations from the other manufacturers). And after you finally done your assessment, you realized that the profit margin is too low (after you factor in the Amazon fee), and that there are too many competitors selling the same thing.
  • Finding the right product to sell — this is really an Art if you ask me. Yes, Jungle Scout and Terapeak are helpful, but still there is no promise of a great selling product and their services are not free. Oh yeah, another website -Camelcamelcamel is free (although less comprehensive).
  • Final sample packaging different from the design you sent — that is a bummer (1000 sets of packaging down the drain). I think it is due to the different Photoshop versions we used.

I don’t consider myself an entrepreneur, but I can understand why entrepreneurship takes so much time. Moreover I have no mentor, and am doing this all alone. What I know is from watching Youtube videos and reading articles online.

I did ask in the Amazon forum. I did get help there, but there were also many remarks which are not particularly encouraging eg. why am I selling such low margin products (probably won’t sell), the bad reputation of the Chinese manufacturers in Alibaba, issues with infringement of intellectual property rights (and get delisted)…. There are after all more cases of failure than successes.

Yes, they list all the issues and possible dangers — solutions, you have to search yourself. Go read the forum threads they tell you, and you get part of the puzzle solved.

My wife thinks I am bonkers… still looking at the same product packaging design after 3 weeks. Sometimes I think I have two jobs (one full time day job, and a part time job that I pay money to do :p).


Currently, I am just trying to do another sample. And hopefully I am able to ‘open a channel’ to Amazon (just send a couple of products to see if the system works). I don’t expect to make a profit (and don’t intend to) at this stage. In fact, if the product is stuck in Amazon for months, I will have to pay Amazon the monthly storage fees.

I anticipate that unless I increase my investment to produce and send more products and invest more money for advertising (pay per click or pay to get reviews), my product will probably ‘not see the light of day’ (or rather buyers won’t even know it exist, as it is stuck in page 70++ or 100++).

Still let’s create a link (to Amazon) first. Get the system up.

So far, the latest update is that I expect 2 samples for 2 different products to reach me by next week. Fingers crossed.

Not as passive as some people might want it to be.





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Short note

I know I should have been investing and cash saved in the bank will just depreciate in value over time.

At the same time, I am keenly aware that I sucks at timing the market. However with the S&P 500 near all time high and STI range bound for the year (at least that is how I feel), and world economy slowing – I am just waiting for the ‘storm’ to come before buying shares (which I deem as under-valued by then).

I have a weird way of looking at the overall unrealized profit and loss in my stock portfolio. And I don’t really trade (or sell) my stocks frequently. Typically if I see more red (losses), and the larger unrealized losses I have, the more I will be willing to accumulate stock. I tend to like to average down (of course sometimes I will end up with value traps or end up catching a falling knife).

A rising market is also exciting for me – it is always great to see unrealized profits.

However, like I said earlier – I feel that the STI is ranged bound. In March 2016, the overall profit /loss for my stock portfolio is 0%. Fast forward to Oct 2016 – it is averaging 0% to -2%. Well of course that is not entirely true as I have already received realized profits from my sale of Sun Hung Kai Properties shares, the delisting of Lyxor Japan ETF, Nirvana Asia (and losses from SMRT delisting).

However, nevertheless, it wasn’t the most exciting period in stocks so far (for me personally).

I don’t know when market will crash, but I know a crash will eventually come (inevitable). For the moment it is a cash hoarding / cash making period for me. Or finding ways to generate income by other means, other than from my salary.

Currently, my war chest has been increasing, and has been relatively high compared to the past few years. However, I still like to add more to it.


Work wise, the construction industry seems to be stagnating. Well, I earn a fixed salary every month – there is a limit how much I can expect in increasing the cash income from my salary. As much as I work hard (although there are times when there are little to do), I don’t think I can increase income exponentially there.

Consequently, given the stagnation in my work, I don’t think it would be wise to seek excitement from my investments. If I want excitement, I would go to the Casino, not the stock market.

Well, I have been trying out Amazon FBA. Have not actually managed to ship anything yet (probably due to the recent 1 week holiday in China, and most Chinese manufacturers don’t work during this period). Not really sure if things would work out.

It is not easy liaising with the Chinese manufacturers. So far I have spent money on samples that failed (whole batch of packages printed wrongly); manufacturers unable to send actual samples, or do actual stickers or packaging due to small quantity of one sample, difficulty in payment (had to pay via Western Union… most suppliers use PayPal thankfully); competition from the suppliers themselves, lousy designs from Fiverr designers (and often late), etc.

Till today I am unable to get a ready sample done according to my specifications…

Not easy. Every step is a learning process.




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Selling via Fulfillment by Amazon (FBA) – Status update (Part 2)

Ok, this will be a short post and will be continuation of my previous post.


  1. So yes I got my new logo and brand name from fiverr. There was a slight hiccup as yesterday morning the designer messaged me and told me that he would like to cancel the order as he had too many orders. However, I declined and he offered to do it if I gave him one more day, which I did. So yes I got my logo / brand.
  2. While waiting, I decided to do another logo / brand name with another designer (in case the first designer fail to deliver).
  3. With the new logo I received, I added it onto the design of the package I did. I sent it to the manufacturer, whom kindly suggested that I do the rear side as well (and showed me examples of other packages). So I did and emailed her back the completed packages. I think the images are kind of fuzzy as I had to photoshop some. Nevertheless – packaging done… Yeah! Well, will see how the final sample look. I have paid them for the sample and shipping and be checking up with them how long they need to ship it over. I highlighted that I want to see the photographs of the sample before they send over in case I have some last minute comments. I will be probably taking photos of this sample to post on my Amazon listing should I find the sample satisfactory.
  4. I have been playing around with the website Fotofuze (click here). It helps to generate clear photos of the product with clear background. So that the product looks better and the focus will be on the product itself.
  5. I have signed up with Jungle Scout (click here). This will help to facilitate my research in finding products with high sales revenue, light weight, low no. of reviews…. (eg. high demand but low competition). Been playing around it. I guess I will spend some time doing that over the weekend.
  6. Also in the meantime, when I see viable products I will just message the Chinese manufacturers to link up and check on their prices vs quantity …


As compared to P2P loans / Invoice financing and stock investing – there is more upfront work to be done for the FBA business. However, the thing is you actually have a physical product. So you can control and change certain aspects of it.

However the Amazon market again is a ‘jungle’. You never know how your product will perform unless you list it out there. From what I have read, it is not as simple as just packaging and finding the right product. Your reviews and your historical performance counts. New sellers may be disadvantaged.

There are websites that allow people to buy discounted items at USD 1 dollar in exchange for their reviews. From the number of posts and videos I came across- there are mixed reviews.

And research is important – Jungle Scout is one site you can use (but you need to pay).

I intend to just focus on this one product first. Start small. If it works, that is great. If it fails, it is ok (after all I am using my passive income to do it).

With regards to my other income portfolio. I am disappointed that SMRT got delisted. I will also be expecting payment for the delisting of Nirvana Asia. I have been on the look-out for stocks to be added to my portfolio, and can only hope that market turn lower to allow me to buy at a good price.

For my P2P loans and Invoice Financing portfolio – the system is more or less automated in Capital Match. Less so for Funding Societies. However, won’t be adding funds there in the meantime.


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Selling via Fulfillment by Amazon (FBA) – Status update (Part 1)

Ok, this will be a short post and will be continuation of my previous post.


So what is my progress as to the FBA experiment since my post on 25 Sept 2016? See below:

  1. Yes, I managed to create a Seller Account with Amazon.
  2. I think I would like to try a Private Label route (read here on how one does wonder with by selling via Private Label), instead of Retail arbitrage method which is buying stuff in a store then turning around and selling it for a profit on Amazon.
  3. Had spent time browsing the best sellers on Amazon, and finally thought of what I can sell.
  4. Managed to list a product. (PS: I have been watching some Youtube videos on how to create a product in the Amazon Seller Website and shipping to Amazon).  That would include buying a UPC code online (aapprox. USD 7). However the product is not active as there is no stock :p
  5. In the meantime, I have been liaising with the manufacturers from China (via Alibaba). Think I have contacted 5 or 6 suppliers. This is the time consuming part. I wanted to find out the type of products, price, quantity and shipping cost etc. Next I want to know if the manufacturers do packaging. I reckon packaging is very important (as well as the quality of the product itself), and I wanted to design my packaging with logo. So far I have shortlisted 2 good ones.
  6. Concurrently I have searched for a name for the brand. The website – namecheckr (click here) is a great tool. With this website, I can check if the name I created is not used in other domains or sites.
  7. With the brand name decided, I decided to do a logo. I went to the website – fiverr (click here) to ask someone to help me create one in 3 days (for approx. USD 6). Should be getting the first draft tomorrow.
  8. At the same time, I have been designing the packing myself (minus the logo).
  9. So once the logo is delivered and confirmed, I will have the packaging design ready. And with this I can send to the 2 manufacturers to ask for Samples to be delivered to me in Singapore. 1 sample is approx. USD 100 as the packaging is customized. Yup – the next milestone, will be reviewing samples and taking photos (to post on Amazon should I want to sell that product).

Total amount spent so far: USD 13


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Selling via Fulfillment by Amazon (FBA)?

In my earlier post I mentioned about online selling.


There are a couple of ways of doing it. One is by creating an online store (eg. via Tictail or Shopify). The second option will be via the online marketplace such as Amazon or Ebay.

I have tried the online store idea sometime back with totally no success. Firstly it is hard to generate traffic to your store, and secondly you need to create a list of viable products to sell.

With regards to the second option – I have been reading up on being an Amazon FBA seller. Yes you can do so even if you are staying in Singapore and is a non US citizen. And it appears to be scalable, and can be done remotely (with no need for storage area).

I find the following blog posts inspiring:

  2. “Chapter 9: Amazon FBA Journey from Jan 2014 to Jan 2015” by JASONTAYONLINE BLOG (read here)

Basically, I have my doubts on whether it is really viable and profitable to buy in bulk from China (eg. from Alibaba or Taobao) to sell in the US by shipping to the Amazon Fulfillment Centers. There are numerous articles which state that:

  • The Chinese Manufacturers have wised up and started selling directly via Amazon (esp. after you asked them to ship directly to Amazon Fulfillment Centers);
  • There are numerous infringement issues when the company (selling the brand) found out that you are selling their brand new products in Amazon (and you are not their approved re-seller). Basically, Amazon will just forward their letters directly to you and it would be wise for you to de-list the product from Amazon;

I guess the first part is to register with Amazon as an FBA seller. I have done so – but it would take 2 working days for them to reply. So let’s see how it turn out.

Next, I would need the following items to be filled up (read here):

  1. A credit card that can be charged internationally,  i.e, a Mastercard or Visa.
  2. A local bank in my country that supports ACH which stands for automated clearing house which really means your bank can accept electronic transfers
  3. My local address
  4. My country uses currency supported by Amazon.  Click here to see the list.  This is not an issue as Singapore is in the list.
  5. A phone number (you’ll also need your international prefix number) – I reckon I have to use Skype or Viber.
  6. A US EIN number.  I need to fill out an online form 10-BEN on the IRS.gov website (Internal Revenue Service which is the US government tax collection agency)

Beyond that there is the issue of shipping to 3 different Fulfillment centers (yup Amazon require that you ship to multiple warehouses (read here).

Ok, these I shall KIV first.

I have contact the Chinese Suppliers in Alibaba, and this is rather time consuming. And I have yet to get my first sample.

From what I have read, it would good to contact multiple suppliers (they should be Gold members if you are using Alibaba) – typically 5 to 7 suppliers for a single product. I managed to contact 2 for one product and have been trying to find the overall cost of shipping to US and shipping the sample to Singapore.

Like I say, it is one of my mini experiments. There is no due date or dateline I give myself. There is also no amount I intend to make. However, I try to set aside some of my passive income each month trying out.

I do it when I am free. I guess you ever only fail if you stop trying. Yes, you will fall plenty of time…

Put it in another way- if I managed to sell something, that is a major milestone for me. If I managed to sell something at a profit, that is a super major milestone for me.

Heck – getting a SGD 20 NTUC voucher by doing online surveys using time which I couldn’t be doing anything else is something new (though I really think it is a tough way to “make a living” :p) .


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Experiments with other income streams

Given the fact the US markets were at all time high only recently, I have not been actively investing in stocks in recent times. Still reading and occasionally research on potential stocks.

My passive income stream is still intact – mainly coming from Stock dividends and interests from P2P loans & Invoice financing.

However, I must say my year to date experiment with P2P loans have been bitter sweet and not at all smooth sailing. I do not consider it a success (as with most of my initial endeavors). A single (or couple of) defaults would eliminate all the profits / interests which I have earned so far.

Nevertheless, I have been thinking of ways of finding other income streams. Although with not much success.


Put it this way, if you have some passive income every month, be it a few dollars or a few hundreds or maybe more…. you have a couple of options:

  1. Invest the income (to generate more passive income)… well, I still feel that now is not a good time to actively purchase stocks…
  2. Spend it.
  3. Donate it.
  4. Save it.
  5. Or use some of these income to try something new, a new endeavor to generate more income and for self development (What have you got to lose?).

Sure, it is a good feeling to achieve financial independence. Eg. Having enough income to pay your living expenses for the rest of your life without having to work full time. However, it is also dangerous to be too complacent about it.

To be frank, at the moment I find that in terms of income (be it active or passive), I am quite comfortable. Typically the monthly passive income I obtained (I divide the annual amount by the no. of months per year) is sufficient to cover most of my monthly expenses.

“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.” Henry Ford

Typically as a full time employee, my main source of income is my monthly salary. If we are to relate income to water / streams — my primary income which is my monthly salary is like a great river (at the moment). However, I am trying to find ways to create multiple mini tributaries via other ways to generate income. One day, ultimately the river will dry up (when we stop working). Hopefully by then these mini tributaries can generate enough cash to make up some or if not most of what was originally from the main river (monthly salary).


  1. Well, I have tried online paid surveys (click here and here). After 1 or 2 weeks of trying (typically during my spare time eg. waiting for bus / MRT, stuck in boring meetings, etc), I made a grand total of SGD 22 (Consisting of a SGD 20 NTUC voucher and SGD 2 cash). This method is definitely not scalable, and is extremely time consuming. I do not really consider it as passive income. Well, I only do it when I am really bored (and normally when there is free WIFI if I am using my smartphone).
  2. Online selling. So I have been spending time researching this. I personally think that it is a lot of time and effort and have read a lot of bad reviews stating that this online selling business is a waste of time / money. However, if you take it as a long term investment (and take things slow) to learn something, it might turn out to be a worthwhile passive income stream. No harm reading and trying something new (when you are free). Well, I have yet to successfully sell anything. Nevertheless it was interesting getting a few samples and testing out … who knows.
  3. Creating and Selling Ebooks. Well there are a couple of websites that allow you to create ebooks to sell. If you have a flair for writing – it is worth a try.


Personally speaking, I don’t assume “passive income” as something that is totally without effort. I think you have to put in effort upfront, often a lot of it (and in many occasions, things don’t work out the way you want it to be).

Well, if you have hoped that this blog post be about success stories in achieving lots of passive income — sorry to disappoint you.

Even when it comes to stock investing or investing in loans… you need to do a certain amount of research before clicking the buy button. You really need to convince yourself first (that it is a great company and the price is right). There is a saying:”You make money when you buy not when you sell”.

Having said that, whatever I do, I still made sure I give my best to my full time job. After all it is still the biggest income stream for me.




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Fu Shou Yuan International Group Limited


Before I go into Fu Shou Yuan International Group Limited, let me start off with my thoughts on my stock portfolio.

Thoughts on Stock Portfolio

I typically don’t change the components of my stock portfolio much. In other words, I don’t trade often and am basically quite ‘lazy’ or ‘hands-off’ when it comes to managing my portfolio.

However, in recent times, I had to say goodbye to a number of stocks in my portfolio. Not because I sold them away, but rather it was because they were delisted. See below:

  • LYXOR JAPAN (TOPIX®)(DR) UCITS ETF: On 22 July 2016, Lyxor International Asset Management has decided on an early liquidation of the Class USD of the Fund as the Class has not attracted sufficient investor demand. I have already received the cash payout.
  • Nirvana Asia LtdOn 8 July 2016, Private-equity firm CVC Capital Partners said that it agreed to pay $1.1 billion to buy out Nirvana Asia Ltd., Asia’s largest funeral-services provider by revenue. They would pay three Hong Kong dollars (39 U.S. cents) a share to take Nirvana private. Nirvana Asia was only recently listed in end 2014. I have already receive the notification from the brokerage firm asking me to confirm if I would like the subscribe to the cash payment or preference shares/ordinary shares/ cash offer.
  • SMRT: On 20 July 2016, Temasek Holdings’ unit Belford Investments announced that they are offering $1.68 for each SMRT share that Temasek does not already own. Well, at the back of my mind, I was hoping that the privatization does not materialize (on 29 Sept 2016).

So even though I did not ‘sell’ my stocks, my cash component still increased in recent times. I did achieve realised profit from the cash offer for Lyxor Japan and Nirvana. But still I would much rather they stay in my portfolio for a longer period of time / years.


Cash Proportion

If I include the cash offer for Lyxor Japan ETF (which I have already received) and the estimated cash offer for Nirvana Asia (which I have yet to receive), the cash proportion will be approximately 14% (see below). Still relatively low proportionally. However, I reckon I have significant war-chest…. to start thinking of what to do next.


However, before I continue, I still think now is still not the time to start buying shares actively. US markets are still high, while the Singapore market is range bound. In short, “blood is not on the street” yet.

Nevertheless, it is always a good time to read about potential stocks. A few stocks have been on my radar in recent times and I have written about them. See the below list.

  • Straco Corporation Ltd (read here)
  • Chipotle Mexican Grill, Inc.(read here)
  • Super Group Ltd (read here)
  • QAF Limited (read here)
  • Heineken Malaysia Berhad (read here)
  • Singapore Technologies Engineering Ltd (read here)


Death-care Stocks

As mentioned earlier, one of the stock in my portfolio will be delisted soon – Nirvana Asia Ltd. I like this company and its business (Death-care). With the delisting of this stock, I do hope to find another stock which is in the same industry and fundamentally similar to replace it.

I have previously written about the listed Deathcare companies and Nirvana Asia in Oct 2015 (read here).


About Fu Shou Yuan


Reading through what I have written previously, Fu Shou Yuan appears to be a good candidate. It is listed on the Hong Kong Stock Exchange.

The beauty of a deathcare company is that it is relatively immune to recessions or economic slow-downs. As mentioned in the Chairman Statement in Fu Shou Yuan 2015 Annual report:

Although China’s economic growth has slowed down, the core business still managed to achieve robust growth due to the relatively limited impact of the economic cyclical fluctuation on the death care industry.

A bit about the company:

  1. In 2015, cemeteries and funeral facilities controlled by the Group span 15 cities throughout the PRC. The Group is the largest death care services provider in the PRC. As at the end of 2015, the group owned up to 14 cemeteries (of which 13 were constructed and 1 was under construction), and were operating up to 9 funeral facilities throughout the PRC.
  2. It operates through three segments: Burial Services, Funeral Services, and Auxiliary Services. The Burial Services segment primarily sells burial plots but also provides cemetery maintenance services; and sells other burial related products and services.  The Funeral Services segment offers customized funeral services comprising planning, organizing, and conducting funerals. The Auxiliary Services segment provides landscape and garden design services.
  3. In January and February 2016, the company entered into agreements on the construction and operation of funeral homes under BOT model and the construction of cemeteries on a joint venture basis with relevant local governments of Tai’an City in Shandong Province and Bishan District in Chongqing Municipality respectively.
  4. In 2015, the company completed the acquisition of Guanlingshan Cultural Cemetery, Wuyuan Wanshoushan Cemetery, Anyang Tianshouyuan Cemetery and Changzhou Qifengshan Cemetery. They also entered into cooperation agreement with Dafeng Funeral Home in Dafeng City, Jiangsu Province on jointly developing Dafeng Funeral Services Center.
  5. Construction of the production base for environmental-friendly cremation machines in Guangde City of Anhui Province was completed in February 2015.
  6. in 2015, the Group realized the sale of 17,322 tombs and performed 15,176 funeral services and recorded total revenue of RMB1,108.0 million, representing an increase of 39.3% as compared to 2014.


The main revenue generator is from Burial services as shown above.


Of which, the majority of the revenue comes from Shanghai.


Sale of burial plots represented the largest component of theirrevenue from burial services, which contributed 98.3% of their revenue from burial services for 2015.


The selling prices of burial plots of each cemetery vary according to local market conditions. They have twelve cemeteries in operation as of December 31, 2015, and have been deriving revenue from them. They achieved remarkable growth for 2015 in almost every cemetery where they operate as compared to 2014.


Financial fundamentals

It does have relatively better financial fundamentals (See below).


Looking at the above figures:

The bad points:

  1.  In terms of valuation, P/E is high (at 28.49). Price/book ratio is way too high (>1). Similarly for EV/EBITDA, it is very high (As a rule of thumb, any EV/EBITDA below 10 is the sign of a good value). In gist – expensive stock.
  2. The current ratio at 3.92 is too high. A high current ratio can be a sign of problems in managing working capital. (Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses).

The good points:

  1. In terms of Profitability, Profit margin and Operating margin are high (at 26.13% and 37.34% respectively).
  2. Balance sheet wise: With a total cash of HKD200.65M vs total debt of HKD27.33M, thus leaving the company to be within a overall cash position of HKD173.32M.
  3. It has low Total Debt / Equity ratio.

I am neutral on the Management effectiveness. The Return on Equity at 15.02% is ok. Not fantastic but acceptable.

In general, the fundamentals of the company is alright. Not exactly a growth stock (eg. ROE >20%). Its balance sheet is great, but its valuation appears expensive.


Historical financial performance
Let’s check out its historical financial performance. Although the company was founded in 1994, it was not listed for long. It was only listed in Dec 2013, and the stock soared as much as 66 percent in their Hong Kong trading debut

China funeral company soars in HK debut, leads spate of 1st day gains (read here)

Although the history does not guarantee the future, but frankly that is the only fact we have. See below charts (Data from Morningstar).

A.jpgThe revenue, operating income and net income have all been trending up over the years. Which is good.


The company has been increasing the dividend payout in recent years. However, the payout ratio has also increased – although the ratio is not alarmingly high (less than 30%).


The free cash flow has been steadily increasing over the years. Which is great.


This chart looks worrisome. In general, ROA, ROE and ROIC has been trending downwards, while financial leverage remain stable at low levels. Well, a good sign is to see at least ROIC trending upwards – nevertheless it was stable in recent years.

Looking at the above charts, in general the fundamentals have been trending up over the years, especially the Net Income and Free Cash Flow. In addition, dividend has been increasing.  However, the increase in income did not translate to better ROE and ROIC in recent years… and given the relatively short history, I wonder if this stock would be “investor friendly”.


Trailing PEG and Intrinsic Value
Let’s do a quick study on the current share price of HKD 4.59– via Trailing PEG and Intrinsic Value.

1) Trailing PEG

P/E: 29.57 (Most recent filing from POEMS)
Dividend Yield (%): 1.1 (from POEMS)
5 years EPS compound growth rate: 13.94 (from POEMS)

The trailing PEG will be 29.57/(1.1+13.94) = 1.97. Which is not good (above 1).

2) Intrinsic Value

First let’s look at the estimated 5 years earning growth. We are going to use a time-frame of 5 years from now for this purpose. Given EPS and a PE ratio, stock price can easily be calculated for any company. Using the below formula.

F = P(1+R)N where:

F = the future EPS
P = the starting (present) EPS (0.16)
R = compound growth rate (13.94%. However let’s take a 20% discount, and use 11.15% as I am not really sure if growth can be maintained.)
N = number of years in the future (5)
Estimated future EPS: 0.27

I will be estimating the future PE of Fu Shou Yuan to be 37.1 (See below data from Morningstar) – average of the PEs from 2006 to 2016.


Future Stock Price

P = future stock price
EPS = future EPS
PE = future PE
Hence future stock price of Fu Shou Yuan is 0.27 x 37.1 = 10.017

Intrinsic Value

P = present (intrinsic) value
F = future stock price (10.017)
R = MARR (15% or 0.15)
N = Number of years (5)
Hence, the intrinsic value of Fu Shou Yuan is HKD 4.98

Stock price of Fu Shou Yuan International Group Limited (1448.HK) on 19 Sept 2016 is HKD 4.59. Hence, there is margin of safety. The stock price is approx. 8% lower than the intrinsic value.


In gist:

I like the business model of this company and the fact it is the largest death care services provider in the PRC. From what I have read, it is still actively growing its business. The Death care industry is a pretty recession proof industry.

However, I am always careful when it comes to China-linked stocks. And moreover it was only recently listed in Dec 2013. There isn’t much historical data.

It does not have a high dividend yield and its ROE and ROIC have not been trending up in recent years.


The valuation of the stock is rather expensive, and the trailing PEG also show that the stock is over-valued. The intrinsic value is higher than the current stock price, but the margin of safety is not big (well – I did after all took a 20% discount for the compound growth rate). I would want a bigger buffer for China linked stocks.

I like the fact that the stock price has been trending downwards in recent months.

Well, good stock nevertheless. Still expensive- will be keeping an eye on this one.

Yup, still waiting for the storm to come.

Posted in Fu Shou Yuan | Leave a comment

P2P Loan & Invoice Financing Portfolio Update


Thought I should just upload a post on the status of my P2P loan and Invoice financing portfolio.


It wasn’t all smooth sailing as you can see. There are a number of loans in arrears.

However, for some of these loans in arrears, the platforms have sent emails clarifying the reasons for the delay in payment.


  • Item 12 in Funding Societies portfolio (P2P loan / Unsecure loan): Clarification from platform on Aug 11, 2016
  1. The company has been very cooperative. Unlike other delinquent borrowers that just go missing, the construction company has proactively updated the platform which is a positive sign.
  2. Their late repayments are not out of industry norms. The company is waiting for payments from the Land Transport Authority (LTA) for their completed projects. Since LTA is a government agency, the counter-party risk of LTA defaulting on their payments to the company is not high.
  3. Based on submitted statements, the construction company does not have significant liability relative to assets, hence LTA’s repayment should enable them to repay the loans. They expect LTA to release the payment this month. No promise but they’re trying (hard to chase government agency to move fast).


  • Item 9 in Capital Match portfolio (P2P loan / Unsecure loan): Email from platform dated 9 Sept 2016 
  1. The platform has received a cheque from the borrower for the remaining of July instalment. They will deposit it next week.In the meantime, the borrower applied to two banks for property refinancing of his property. The process with banks takes longer, but once successful, the borrower should get additional cash of S$200,000-300,000 that would be sufficient to settle the debt.


  • Item 11 in Capital Match portfolio (Invoice financing): Email from platform dated 9 Sept 2016 
  1. The debtor (China Construction) made a payment to the seller this week of only ca. S$30,000 (on some small invoice). The debtor still owes the seller around S$1.1m. A large payment is expected on September 15th (next week). The platform will collect the payment then.


  • That leaves just item 1 in the Funding Societies portfolio (P2P loan / Unsecure loan). The last I heard is that one of the bank is commencing bankruptcy proceeding against the company.


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Straco Corporation Ltd

In my search for value (stocks), one stock / company has been consistently popping up – Straco Corp Ltd.


Why Straco caught my attention

1) The stock price has been hovering near the 52 week low (now not exactly near the lowest though).

2) The company management has been repurchasing their company shares in recent times:

    a) On 29 Aug 2016, Company has repurchased 119,800 shares at SGD 88,985.13 (read here).
    b) On 24 Aug 2016, Company has repurchased 50,000 shares at SGD 38,023.23 (read here).
    c) On 19 Aug 2016, Company has repurchased 50,000 shares at SGD 38,824.57 (read here).
    d) On 12 Aug 2016, Company has repurchased 50,000 shares at SGD 39,648.2 (read here).

3) Well, in Dec 2015, The Motley Fool pointed out that Straco has the following good attributes (read here):

    a) A strong balance sheet with more cash than debt currently.
    b) An average return on equity of at least 12% since 2007 while having more cash than debt.
    c) A track record of consistent earnings growth since 2007.

After all, according to The Motley Fool, it is one of the 2 Rock-Solid Stocks For 2016.

So yes, it is definitely on my radar.

However, with the US markets at all time high, I wasn’t keen on investing yet or adding more into my portfolio. Well the same can’t be said for the STI (Straits Times Index). For me, the performance of STI appears range bound (see below chart). It wasn’t too long ago (in June 2016) when the STI was considered as one of Asia’s worst performing indices.

    Chart of the Day: The STI is one of Asia’s worst-performing indices (read here)


The correlation between the US markets and the Singapore market is not that clear these days (as compared to decades ago). Well I can’t help feeling that when the US markets do well, it does not necessarily mean that the Singapore market will do well. However, when the US markets do badly, Singapore market unfortunately will do badly as well – head we lose, tail we lose.

I have not been actively buying stocks for months, and was in fact looking more in terms of dividend yielding stocks (for future buying when prices drop). Straco with a dividend yield of only 2.67% isn’t exactly the kind of income stock I was looking for. I would classify it as a growth stock with potential for capital gains.

Well technically, the dividend yield is 3.33% for 2016 so far, and the yield has been increasing each year since 2007 (see below). More on the dividend payout & payout ratio later.

A brief introduction to Straco Corp Ltd:
Straco is an owner and operator of tourism-related assets in China and Singapore. In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions under its umbrella. As for Singapore, Straco had acquired a majority stake in the iconic Singapore Flyer in 2014.

  • The Singapore Flyer (“Giant Observation Wheel”), which is the Group’s flagship project in Singapore. Launched in 2008, it is one of the world’s largest Observation Wheels standing at 165m tall. This attraction generated revenue of S$38m in FY15, whichrepresented c.29% of the Group’s revenues for 2015.
  • The Shanghai Ocean Aquarium is the Group’s flagship project in China and one of the most popular major attractions in Shanghai, with more than 1m visitors every year. Built at a cost of US$55m, it has a total built-in area of 20,000 sqm that can house up to 21,000 people a day.
  • Underwater World Xiamen is another aquatic facility belonging to the Group. It has a capacity of 5.8m litres of water and is home to a wide array of fresh water and marine livestock. It is located on the scenic Gulangyu Island. The bulk of Straco’s revenues are derived from China- based attractions. In 2015, the aquariums collectively contributed S$87m, or about 68% of total FY15 revenue.
  • The Lixing cable-car service which is located at the scenic Mount Lishan Xi’an, measures up to 1.5km in length. This project was a pioneer in Western China in building a cable-car service of international standards that offers a spectacular view of the mountain and its surroundings. The cable-car ferries visitors from the base to the mid- level of the mountain where Chao Yuan Ge (“CYG”).
  • Straco also owns the development rights to CYG, an integral part of the restoration project for the grand “Hua Qing Palace”. The preliminary development concept for the CYG project showcases the unique culture and architectural features from the Tang Dynasty period through reconstructed replicas of its major buildings.

I view Straco’s business as cyclical – as it is heavily reliant on tourism (which in general is cyclical). When times are bad, the tourism sector tends to be affected negatively. For instance in 2011, the net income of Straco dropped.

Note: The August 2011 stock markets fall was due to fears of contagion of the European sovereign debt crisis to Spain and Italy, as well as concerns over France’s current AAA rating, concerns over the slow economic growth of the United States and its credit rating being downgraded.

Financial fundamentals
Let’s take a look at Straco financial fundamentals.


Looking at the above figures:

The bad points:

    1) In terms of valuation, Price/book ratio is high (>1).
    2) Total debt/equity ratio is high at 31.12 while the current ratio at 5.82 is too high. A high current ratio can be a sign of problems in managing working capital. (Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses).

The good points:

    1) EV/EBITDA is low, at 7.38 (As a rule of thumb, any EV/EBITDA below 10 is the sign of a good value).
    2) In terms of Profitability, Profit margin and Operating margin are high (at 37.23% and 52.9% respectively).
    3) Management effectiveness is great. The Return on Equity is a good at 23.89%.
    2) Balance sheet wise: With a total cash of SGD124.69M vs total debt of SGD67.9M, thus leaving the company to be within a overall cash position of SGD56.79M.

Not exactly clear cut when evaluating the above. However, its balance sheet appears to be on the strong side while profitability (profit margin / operating margin) & ROE are great. So overall it is not bad.

Moreover as mentioned earlier, the company does have a history of a) An average return on equity of at least 12% since 2007 while having more cash than debt and b) A track record of consistent earnings growth since 2007.

Historical financial performance
Let’s check out its historical financial performance. Although the history does not guarantee the future, but frankly that is the only fact we have. See below charts (Data from Morningstar).


The revenue, operating income, operating margin, net income and earning per share have all been trending up over the years, except for the sudden drop in operating income and operating margin in 2010 and 2011. It shows how the company’s income and margins can be negatively affected during bad years.


Despite the few years with low income and margins, the company has been increasing the dividend payout over the years, and the payout ratio has been pretty consistent (not too high, always below 45%- which is great).


The free cash flow has been steadily increasing over the years, except for a slight dip in 2011.


In general, ROA, ROE and ROIC has been trending upwards while financial leverage remain stable at low levels. However in recent years the ROIC and ROA have been trending down slightly.


Another thing to note is that current ratio (which compares a firm’s current assets to its current liabilities) has been pretty erratic. However it has been trending down through in recent years (see below). Acceptable current ratios vary from industry to industry and are generally between 1.5% and 3% for healthy businesses. If a company’s current ratio is in this range, then it generally indicates good short-term financial strength. Hopefully it can fall within this range in the coming years.

The financial leverage and debt / equity have been both in the healthy range (eg. low values) over the years.

Looking at the above charts, in general the fundamentals have been trending up over the years. However, the company is not exactly recession / market crash proof – as can been seen in the sudden drop in operating income and operating margin in 2010 and 2011.

Trailing PEG and Intrinsic Value
Let’s do a quick study on the current share price of SGD 0.75 – via Trailing PEG and Intrinsic Value.

1) Trailing PEG

P/E: 13.23 (Most recent filing from POEMS)
Dividend Yield (%): 2.67 (from POEMS)
5 years EPS compound growth rate: 21.41 (from POEMS)

The trailing PEG will be 13.23/(2.67+21.41) = 0.55. Which is good (below 1).

2) Intrinsic Value


Hence intrinsic value of Straco Corp Ltd is SGD 2.40.

Given the current stock price of Straco Corp Ltd on 9 Sept 2016 is at SGD 0.75, there is a big margin of safety base on the estimated intrinsic value.

In fact, current share price is lower than intrinsic value by 69%.

Yes, it would perhaps be a good buy at this moment. However given the cyclical nature of this stock & US markets at all time high, I would want to wait a little while for markets to become depressed to pick this up at a lower price.

Nevertheless, I will be keeping an eye on this stock in the meantime.

I am still in the “building up my war-chest” phase.

Posted in Straco | Tagged | 3 Comments

Portfolio proportions

Did a quick chart to tabulate what is the proportion of the various assets (excluding the property I am staying in).

Still predominantly in shares. Well, no bargains in sight for me yet.
I shall keep increasing my cash value (war-chest). The proportion of P2P loans and Invoice financing has been decreasing steadily month after month.

Yes, the quest for dividend paying stocks is never ending. However, the upcoming huge supply of office spaces seems worrying.


    CapitaLand Commercial Trust Looks to Sustain Its Distributions As Pressure Mounts on Office Rentals (read here)

    Are Commercial REITs In Singapore Going To Be In Trouble? (read here)

There are a number of real estate investment trusts that have exposure to the Singapore office market and they include Frasers Commercial Trust (SGX: ND8U), OUE Commercial REIT (SGX: TS0U), Keppel REIT (SGX: K71U), and CapitaLand Commercial Trust (SGX: C61U).

And I do notice that most of them appear undervalued (with price to book value less than 1). However, I would probably wait for the blood on the street scenario. Moreover with the impending rising interest rates & slow global economic growth – it might be a perfect storm. Residential property market on the other hand (with ABSD) seems to be in a better shape (although prices are still in a downtrend).


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