#1: Nobody knows where the market bottom is.
It may be hard to believe, but your guess on the stock market bottom is as good as anyone's. That anyone includes Ben Bernanke, Hank Paulson, Bill Gross, George Soros, Warren Buffett, Lloyd Blankfein and even Jim Cramer.
In six months, the media will dig up some lucky market analyst who made a "remarkably prescient" call and turn them into a hero, a la Elaine Garzarelli, the analyst credited with predicting the Crash of 1987.
#2: Do not sell into a panic.
Anyone who sold their stocks on Black Monday, Oct. 21, 1987, came to almost immediately regret it. I know I did. I was a junior banker in London and watched the meltdown on our lone department Quotron.
My brain said, "Hang on, hang on." My wallet said, "Run for your life." With one phone call, I sold every Fidelity stock fund I had and promptly lost a quarter of my net worth.
The temptation to panic is primal. Be a man, not a monkey.
#3: Look forward, not backward.
Does anybody remember how negative sentiment was in October 2002? The S&P 500 was down almost 50% from its record of 2000. The Nasdaq Composite Index was off 75%. I had just returned from 10 years in Europe to run the UBS tech banking group.
What struck me when I first visited Silicon Valley was how negative everyone was. That was because my colleagues and clients saw the world through the distorted prism of the Internet boom. They couldn't see the tech market getting better in the future, because the tech market couldn't be any better than it had just been.
The market looks forward, but people like to look backward. A Cisco Systems shareholder that owned the stock at $77 has trouble forgetting that $77 price when the stock falls to $15. In time, it doubled to $30.
Is Citigroup at today's closing price of $16.76 so different? Wall Street in 2008 is Silicon Valley in 2002. It will get better in time.
#4: It's investing, not gambling.
Why do we obsess over our ability to pick the bottom or top of a stock price or the market? Statistically, it is a total crap shoot.
As Bernard Baruch said, "Don't try to buy at the bottom and sell at the top. It can't be done except by liars."
Financial panics bring out the worst in these tendencies. All this weekend, I was chewing over whether or not it was the right time to buy the XLF, the financial sector ETF that is trading at nearly half its record high.
I haven't pulled the trigger yet, but I know that picking a bottom is a mugs game. Admittedly, an awfully tempting one. Better to use common sense.
Set price and allocation targets, space out investments over time. Since the beginning of this year, I have made fund purchases on about 20 different dates with an average cost base equivalent to an S&P 500 level of 1346. On that money, I am down about 5%. There are mutual funds that charge that much for an up-front load. Investing like this won't make you rich, but you won't gamble yourself into the poorhouse either.
#5: It's only money.
There is no point in fighting the tape or your emotions as the market is gripped by panic. Next time the Dow industrials are down 300 and heading down further, do what you make your children do: take a time out. Turn off CNBC, your computer and BlackBerry and leave the office. (Wall Street professionals, unfortunately, this doesn't apply to you. You will get fired.)
I am a believer in the equity markets and have most of my net worth tied up in the stock market. So every panic over the past two decades has cost me, albeit temporarily, big chunks of my net worth.
Does it hurt? Of course. Do I lose sleep over it? Occasionally. But I always keep in mind that it is only money.
I think of my dad, who would inspect me after exhausting banker trips to Japan, India, and Hong Kong. As he would put it: "There's no point in being the richest man in the cemetery."
Tuesday, July 1, 2008
Boustead Singapore: Strengthening foothold in Libya; BUY
Boustead Singapore: BUY (Upgrade from HOLD) S$2.36
Price Target : 12-Month S$ 2.85 (Prev S$ 2.46)
Strengthening foothold in Libya
Story: Boustead announced its largest water contract to date with its wholly owned-subsidiary, Salcon being awarded a S$175m contract to design, construct and upgrade a major water infrastructure system in Libya. Salcon will hold a 65% stake in the Joint Venture with a state-owned utilities company as partner. This contract comprises two phases under which the JV will fulfill all water and wastewater needs of a 731 hectare township in Tarhunah, 80 km east of Tripoli. The contract is commencing in July 2008 and expected to be completed by 1Q 2011.
Point: With the contract, new order wins to date stand at ~S$200m, or about 44% of our full year order win assumption of S$450m. Apart from being on track to meet our orderbook expectation for the full year, this contract would immediately boost FY09 and FY10 earnings by 7% and 9% respectively since project commencement and earnings accretion is ahead of schedule.
Relevance: In addition to contribution from this contract win, we have also factored in an expected S$26m gain ( vs our previous forecast of S$13m) from the proposed sale of a building under construction and land at Ubi Ave1 for a consideration of S$200m. Consequent to our earnings upgrade, our SOTP target price is now revised to S$2.85, translating to 10x FY09 PE and 21% potential upside from current price.
Upgrade to Buy.
Price Target : 12-Month S$ 2.85 (Prev S$ 2.46)
Strengthening foothold in Libya
Story: Boustead announced its largest water contract to date with its wholly owned-subsidiary, Salcon being awarded a S$175m contract to design, construct and upgrade a major water infrastructure system in Libya. Salcon will hold a 65% stake in the Joint Venture with a state-owned utilities company as partner. This contract comprises two phases under which the JV will fulfill all water and wastewater needs of a 731 hectare township in Tarhunah, 80 km east of Tripoli. The contract is commencing in July 2008 and expected to be completed by 1Q 2011.
Point: With the contract, new order wins to date stand at ~S$200m, or about 44% of our full year order win assumption of S$450m. Apart from being on track to meet our orderbook expectation for the full year, this contract would immediately boost FY09 and FY10 earnings by 7% and 9% respectively since project commencement and earnings accretion is ahead of schedule.
Relevance: In addition to contribution from this contract win, we have also factored in an expected S$26m gain ( vs our previous forecast of S$13m) from the proposed sale of a building under construction and land at Ubi Ave1 for a consideration of S$200m. Consequent to our earnings upgrade, our SOTP target price is now revised to S$2.85, translating to 10x FY09 PE and 21% potential upside from current price.
Upgrade to Buy.
心得片片录之二 土方最管用
股票投资的最高境界，是“无为而治”，这也是股票投资者应追求的最终目标，有如长跑家所要达到的终点。
譬如拳道，花拳绣腿好看不好用；高手沉着应战，动作不多，但简单的一招，遇者必踣。
终日在股市中抢进杀出的，鲜有成就，反而是动作不多，买进后就不动如山的投资者，获利最丰。
大马富豪都是这样成就的。
股票投资最有用的道理，最有效的策略，其实还是那一套看起来最老土的道理，最老套的策略。这些道理，这种策略，都经过长期的应用，证明最有用，最有效，所以才能流传到现在，现在还是被应用着，将来恐怕也还是被应用下去。
无数的人，殚精竭虑，要“发明”新的方法，以战胜股市，成为股市常胜军，但是，最后都铩羽而归，他们的“发明”，也很快就被人忘掉，反而是那些“土方”还是被反复地应用着。
所以，不要去相信秘诀，股票投资根本没有秘诀，也不需要秘诀，需要的是以常识，以常理去判断，然后脚踏实地去投资，就行了。
知识最重要
我所能谈的，都是“老生常谈”，但都是较为可用的道理，因为我都应用过了，而且证明可用，才不厌其烦地一说再说。
我怎样写就怎样做，如果我写一套，做的是另一套，对你们公平吗？
要在股市打胜仗，知识至为重要，但不能单靠知识，如果单靠知识就可以投资成功的话，那么个个学者和股票分析师都是亿万富翁了，实际上，学者和股票分析师成功的百分比，不会比平常人高。
股票投资要成功，还必须加上知识以外的“因素”。比如耐心，坚忍不拔的精神，平衡的心智，独立思考的头脑，反应灵敏，虚怀若谷等等。
而最重要的，是心地要好，有些人有幸灾乐祸的心理，听到别人赚钱，自己却亏本，就心怀嫉妒，终日怏怏不乐；如果自己赚钱，听到别人亏本，嘴里虽不说，暗地里却感到高兴。
心地要善良
这是一种心理变态，有这种变态心理的人，心里不会平安，心里不平安的人，不会快乐，不快乐的人做人做事都难有成就。
如果你认为别人的成功就是你的失败的话，你不是一个有福的人。
要投资成功，心地要善良。
知识可以用钱买得到，但修养却要自己去培育，别人帮不了你。
把“心”管好，还是最管用的求福之道。
股票投资失败，损失最大的反而不是金钱，而是时间。
金钱和时间，都是最宝贵的资源，金钱损失了，可以赚回来，时间损失了，可不是金钱可以买回来的。
有人说“时间就是金钱”，其实金钱的价值，怎么可以跟时间相比呢？
时间一去不复返，时间是无价之宝啊！
金钱亏损了，改变策略，或改买别的股票，可以赚回来，时间消失了，是永远赚不回来的呀！
所以，股票投资一定要有珍惜时间和珍惜金钱这两种资源的概念，两者都不能浪费，浪费任何一种，你的人生就不一样了。
巴菲特的金科玉律是：第一，不亏，第二，不忘第一个“玉律”，是至理名言，投资者应时刻记心头。
永远把“不亏“摆在第一位！
我们是凡人，凡人皆会做错，故永远不亏是不可能，但一定要竭尽所能不亏，则是绝不妥协的原则。
要做到接近不亏，就严守：只投资，永不投机！
譬如拳道，花拳绣腿好看不好用；高手沉着应战，动作不多，但简单的一招，遇者必踣。
终日在股市中抢进杀出的，鲜有成就，反而是动作不多，买进后就不动如山的投资者，获利最丰。
大马富豪都是这样成就的。
股票投资最有用的道理，最有效的策略，其实还是那一套看起来最老土的道理，最老套的策略。这些道理，这种策略，都经过长期的应用，证明最有用，最有效，所以才能流传到现在，现在还是被应用着，将来恐怕也还是被应用下去。
无数的人，殚精竭虑，要“发明”新的方法，以战胜股市，成为股市常胜军，但是，最后都铩羽而归，他们的“发明”，也很快就被人忘掉，反而是那些“土方”还是被反复地应用着。
所以，不要去相信秘诀，股票投资根本没有秘诀，也不需要秘诀，需要的是以常识，以常理去判断，然后脚踏实地去投资，就行了。
知识最重要
我所能谈的，都是“老生常谈”，但都是较为可用的道理，因为我都应用过了，而且证明可用，才不厌其烦地一说再说。
我怎样写就怎样做，如果我写一套，做的是另一套，对你们公平吗？
要在股市打胜仗，知识至为重要，但不能单靠知识，如果单靠知识就可以投资成功的话，那么个个学者和股票分析师都是亿万富翁了，实际上，学者和股票分析师成功的百分比，不会比平常人高。
股票投资要成功，还必须加上知识以外的“因素”。比如耐心，坚忍不拔的精神，平衡的心智，独立思考的头脑，反应灵敏，虚怀若谷等等。
而最重要的，是心地要好，有些人有幸灾乐祸的心理，听到别人赚钱，自己却亏本，就心怀嫉妒，终日怏怏不乐；如果自己赚钱，听到别人亏本，嘴里虽不说，暗地里却感到高兴。
心地要善良
这是一种心理变态，有这种变态心理的人，心里不会平安，心里不平安的人，不会快乐，不快乐的人做人做事都难有成就。
如果你认为别人的成功就是你的失败的话，你不是一个有福的人。
要投资成功，心地要善良。
知识可以用钱买得到，但修养却要自己去培育，别人帮不了你。
把“心”管好，还是最管用的求福之道。
股票投资失败，损失最大的反而不是金钱，而是时间。
金钱和时间，都是最宝贵的资源，金钱损失了，可以赚回来，时间损失了，可不是金钱可以买回来的。
有人说“时间就是金钱”，其实金钱的价值，怎么可以跟时间相比呢？
时间一去不复返，时间是无价之宝啊！
金钱亏损了，改变策略，或改买别的股票，可以赚回来，时间消失了，是永远赚不回来的呀！
所以，股票投资一定要有珍惜时间和珍惜金钱这两种资源的概念，两者都不能浪费，浪费任何一种，你的人生就不一样了。
巴菲特的金科玉律是：第一，不亏，第二，不忘第一个“玉律”，是至理名言，投资者应时刻记心头。
永远把“不亏“摆在第一位！
我们是凡人，凡人皆会做错，故永远不亏是不可能，但一定要竭尽所能不亏，则是绝不妥协的原则。
要做到接近不亏，就严守：只投资，永不投机！
Construction Stocks: Keep The 3 S's In Mind
Tiptoeing gingerly around the sector, think specialised, short and selective
THEY say there's no business like show business; right now, they are also saying there's no worse business than the construction business.
The construction industry is being battered from every angle: margins are being squeezed; sand, concrete and steel prices have been taking turns to take off; and residential property sales have turned anaemic.
Steel suppliers further tightened the screws by cutting the lock-in period for steel prices from six months to three months early this year, leaving contractors even more vulnerable to price fluctuations.
It isn't surprising then that some pundits are ironically predicting the destruction of the construction business.
'This is a very bad time to be looking for bargains in the construction industry. It's in bad shape and is the worst hit by inflation,' says an analyst who does not want to be identified.
Other analysts, however, are decidedly bullish on the industry and insist that all builders cannot be tarred with the same brush.
'Investors are not able to differentiate between specialised and integrated construction firms. The former have a lower risk profile,' explains CIMB analyst Lawrence Lye.
Investors should bear in mind the three S's when tiptoeing around the minefield of construction stocks: think specialised, short and selective.
Specialist companies involved in specific parts of a construction project may be better placed to stay out of the crossfire between suppliers and the main contractors that attempt to do everything.
'We would recommend investors reduce their exposure to integrated construction companies,' Mr Lye says. 'These companies have large order books and stand a higher risk of margin erosion.'
Instead, he suggests specialist firms with low exposure to construction material costs, like Tat Hong and Tiong Woon, both of which are crane-leasing companies.
With commodity prices being contractors' Achilles heel, firms with shorter- term contracts are better bets, like foundation engineering firm CSC Holdings, according to Mr Lye.
'CSC's average contracts are short at three to six months, which limits its exposure to fluctuating prices,' he says.
And while trite, it pays to remember the adage, 'location, location, location'. Selective locations, in particular.
'Wealthy buyers tend to be more discriminating, and they will be looking for property in areas like Districts 9, 10 and 11 which are not overbuilt,' says Mr Lye.
Contractors with projects in such areas will be safer bets, as prices are expected to remain relatively higher.
BBR, a contractor working on a development in Nassim Hill, would appear to fit the bill, especially since the estimated benchmark sale price of a similar unit was $2,200 per square foot in June, far exceeding BBR's breakeven price of $1,304 psf on the project.
One particular firm that has struck out on all three counts is Lian Beng Group, a main contractor saddled with a large order book of $800 million extending till 2010 and unsold residential properties.
Order books provide an indication of both future revenue and costs. The larger and longer a firm appears to be committed to an order, the larger and more risky its exposure to raw material price increases.
While Lian Beng's latest projects in Bukit Timah and Emerald Hill are estimated to have higher gross margins, its overall development portfolio remains a risky bet.
'We are cutting our FY08-10 forecasts for Lian Beng by 11-60 per cent to account for risks in its property development profits, which stem from projects such as Lincoln Lodge and Kovan Road, where benchmark transacted prices have fallen below breakeven costs,' Mr Lye said in a report this month that downgraded Lian Beng from 'outperform' to 'neutral'.
Kim Eng analyst Wilson Liew begs to differ on Lian Beng, citing the contractor's advantage in controlling raw material costs because it owns a batching plant for ready-mixed concrete, and maintaining a 'buy' recommendation.
Even so, the writing on the wall cannot be ignored. The valuation of the company has been lowered from $1.12 to $0.68 per share by Mr Liew, based on an expected shrinkage of all-important margins.
In addition to its three strikes, Lian Beng also falls into a category of firms that now fancy themselves as property developers as well.
This category also includes the likes of investment holding company Eastern Holdings and is dismissed by CIMB's Mr Lye as 'Johnny-come-lately firms that snapped up land in the middle of 2007 when property prices had peaked, right before the meltdown in July'.
'Reduce exposure to contractors that have turned opportunistic property developers late in the cycle,' he says. 'These are likely to be saddled with unsold inventory or expensive land.'
And if you must invest in a giant, go for one that has fluctuation clauses to manage raw material prices, like main contractor Chip Eng Seng.
'Gross margins for public projects are likely to remain stable at around 5 per cent, as increases in raw material prices will be protected by fluctuation clauses,' Westcomb analyst Wong Say Tian said in a report this month on Chip Eng Seng. 'We estimate that public projects account for about 60 per cent of the group's existing order book.'
While the bottom line may take a beating for some builders this year, it is still clear: investors should avoid construction companies built on sand if they want a solid portfolio.
THEY say there's no business like show business; right now, they are also saying there's no worse business than the construction business.
The construction industry is being battered from every angle: margins are being squeezed; sand, concrete and steel prices have been taking turns to take off; and residential property sales have turned anaemic.
Steel suppliers further tightened the screws by cutting the lock-in period for steel prices from six months to three months early this year, leaving contractors even more vulnerable to price fluctuations.
It isn't surprising then that some pundits are ironically predicting the destruction of the construction business.
'This is a very bad time to be looking for bargains in the construction industry. It's in bad shape and is the worst hit by inflation,' says an analyst who does not want to be identified.
Other analysts, however, are decidedly bullish on the industry and insist that all builders cannot be tarred with the same brush.
'Investors are not able to differentiate between specialised and integrated construction firms. The former have a lower risk profile,' explains CIMB analyst Lawrence Lye.
Investors should bear in mind the three S's when tiptoeing around the minefield of construction stocks: think specialised, short and selective.
Specialist companies involved in specific parts of a construction project may be better placed to stay out of the crossfire between suppliers and the main contractors that attempt to do everything.
'We would recommend investors reduce their exposure to integrated construction companies,' Mr Lye says. 'These companies have large order books and stand a higher risk of margin erosion.'
Instead, he suggests specialist firms with low exposure to construction material costs, like Tat Hong and Tiong Woon, both of which are crane-leasing companies.
With commodity prices being contractors' Achilles heel, firms with shorter- term contracts are better bets, like foundation engineering firm CSC Holdings, according to Mr Lye.
'CSC's average contracts are short at three to six months, which limits its exposure to fluctuating prices,' he says.
And while trite, it pays to remember the adage, 'location, location, location'. Selective locations, in particular.
'Wealthy buyers tend to be more discriminating, and they will be looking for property in areas like Districts 9, 10 and 11 which are not overbuilt,' says Mr Lye.
Contractors with projects in such areas will be safer bets, as prices are expected to remain relatively higher.
BBR, a contractor working on a development in Nassim Hill, would appear to fit the bill, especially since the estimated benchmark sale price of a similar unit was $2,200 per square foot in June, far exceeding BBR's breakeven price of $1,304 psf on the project.
One particular firm that has struck out on all three counts is Lian Beng Group, a main contractor saddled with a large order book of $800 million extending till 2010 and unsold residential properties.
Order books provide an indication of both future revenue and costs. The larger and longer a firm appears to be committed to an order, the larger and more risky its exposure to raw material price increases.
While Lian Beng's latest projects in Bukit Timah and Emerald Hill are estimated to have higher gross margins, its overall development portfolio remains a risky bet.
'We are cutting our FY08-10 forecasts for Lian Beng by 11-60 per cent to account for risks in its property development profits, which stem from projects such as Lincoln Lodge and Kovan Road, where benchmark transacted prices have fallen below breakeven costs,' Mr Lye said in a report this month that downgraded Lian Beng from 'outperform' to 'neutral'.
Kim Eng analyst Wilson Liew begs to differ on Lian Beng, citing the contractor's advantage in controlling raw material costs because it owns a batching plant for ready-mixed concrete, and maintaining a 'buy' recommendation.
Even so, the writing on the wall cannot be ignored. The valuation of the company has been lowered from $1.12 to $0.68 per share by Mr Liew, based on an expected shrinkage of all-important margins.
In addition to its three strikes, Lian Beng also falls into a category of firms that now fancy themselves as property developers as well.
This category also includes the likes of investment holding company Eastern Holdings and is dismissed by CIMB's Mr Lye as 'Johnny-come-lately firms that snapped up land in the middle of 2007 when property prices had peaked, right before the meltdown in July'.
'Reduce exposure to contractors that have turned opportunistic property developers late in the cycle,' he says. 'These are likely to be saddled with unsold inventory or expensive land.'
And if you must invest in a giant, go for one that has fluctuation clauses to manage raw material prices, like main contractor Chip Eng Seng.
'Gross margins for public projects are likely to remain stable at around 5 per cent, as increases in raw material prices will be protected by fluctuation clauses,' Westcomb analyst Wong Say Tian said in a report this month on Chip Eng Seng. 'We estimate that public projects account for about 60 per cent of the group's existing order book.'
While the bottom line may take a beating for some builders this year, it is still clear: investors should avoid construction companies built on sand if they want a solid portfolio.
Boustead to mark 180th year with bash, $800k donation
THE way Mr Wong Fong Fui tells it, one may be forgiven for mistaking Boustead Singapore's founder as Chinese. That is, if his name wasn't such a dead giveaway.
The number eight plays a prominent role in the life and death of Mr Edward Boustead, said Mr Wong, the company's chief executive.
'His affinity to the number 'eight' is uncanny,' Mr Wong told The Straits Times.
The Chinese, particularly the Cantonese, regard eight as an auspicious number as it rhymes with wealth in that dialect.
Born in Yorkshire, England in 1800, Mr Boustead died at the age of 88 in 1888 in his homeland.
He had arrived in Singapore in 1828 and set up Boustead & Co. The company quickly took off to become one of Singapore's great trading houses, dealing in spices, flavours, seeds, nuts, herbs and oils.
Its interests subsequently extended to include rubber and palm oil plantations, trading and agencies for a whole host of services such as shipping and insurance.
'We were the sole agents for insurance giant Lloyds and big marine insurance companies in the world,' Mr Wong said.
'Hennessy, Procter & Gamble, Cadbury, most of the consumer goods that you see today, Boustead brought them in.'
This year, the company - now known as Boustead Singapore - celebrates its 180th anniversary, making it the second oldest in Singapore. Only property developer Guthrie GTS can claim to be older.
To mark the milestone, Boustead will hold a gala dinner next month. It has commissioned a limited edition coffee table book on the history of the company.
It will also use the occasion to donate $800,000 - that uncanny number again - to charity, an acknowledgement of the philanthropic legacy of the founder, said Mr Wong.
Upon his death, Mr Boustead left £9,000 - a princely sum at the time - to set up a welfare institution for foreign seaman known as the Boustead Institute.
Demolished and long faded in the annals of Singapore history, the institute is, nonetheless, immortalised in many paintings and pictures thanks to its striking architecture and imposing facade at the junction of Tanjong Pagar and Anson roads.
Mr Boustead did not have any heirs. After his death, his associates took over the running of Boustead & Co, which continued to enjoy unparalleled success for almost a 100 years except for when the two world wars were ongoing.
However, the company's fortunes did wane when it was broken up, twice.
In 1960, it was split into Boustead plc and Boustead Bhd following Malaysia's independence from Britain. The substantive part of the business remained in Malaysia and Singapore.
In 1973, Boustead Bhd carved out a Singapore unit - Taiping Singapore - to comply with Malaysia's race-based affirmative programme which was aimed at narrowing the wealth gap between Malays and Chinese.
The loss of plantation assets, which continued to reside with Boustead Bhd, was a near fatal blow to the Singapore unit as it also had to struggle with losing many of its agency businesses.
Then came another round of mergers and acquisitions after which Taiping became Bousteadco Singapore and was subsequently renamed Boustead Singapore.
During this uncertain period, it tried without much success to reinvent itself as an engineering outfit until 1996, when a group led by Mr Wong assumed control.
Banking on his experience as former managing director of QAF - the maker of Gardenia bread - Mr Wong's initial instinct was to turn Boustead into a food company.
In 1998, it started the Bonjour line of breads and a year later, it acquired the Japanese firm Sushi Deli.
But the foray into food was short-lived. Bonjour was sold to QAF for $15 million in 2000 and Sushi Deli was offloaded to Mr Wong and two managers of the Japanese restaurant for just $340 in 2003.
Today, Boustead's focus is on industrial, real estate, energy and environmental engineering. It has a staff strength of about 700 and operates in 73 countries.
While the current business has little in common with the early enterprises that made Boustead famous, its brand name continues to reap goodwill even from afar.
Take for example a trip Mr Wong made to Sri Lanka three years ago, after a Boustead unit had secured a deal to build the first sea water treatment plant in the country.
'While I was there to introduce other services of Boustead, I met the director-general in charge of power. He said to me: 'Your company was the first to introduce electricity to our country.' Indeed!'
Boustead's success is reflected in its healthy bottom line and cash holdings.
In the year ended March 31, the group reported a 46.1 per cent jump in net profit to $51.5 million. Revenue was up 27.5 per cent at $438.3 million. Its net cash position swelled to $150.8 million, up from $100.7 million the previous year.
This has enabled the company to raise full-year dividend payouts to 10 cents a share from 6.5 cents.
Dividend yield is an attractive 4.3 per cent.
Despite this, Boustead shares are off the radar screen of most retail investors, with daily average turnover at a paltry 74,000.
Mr Wong is not unduly perturbed.
'I've been through hot stocks before. QAF was a hot stock in 1993 to 1995, with 50 million shares in turnover daily, and I got queries from the stock exchange every day.
'Today, I don't get calls. Nobody is interested. Never mind, we have very stable shareholders.'
Nonetheless, the company recognises its stock could do with a little lift. It has proposed undertaking a one-into-two share split to make the stock more attractive to retail investors.
A healthy cash hoard means that Boustead is also in a position to grow more aggressively.
'We are in the phase of looking for acquisitions and not afraid of businesses that are not exactly core. If it's a buy, why not?,' Mr Wong asserted, though he is quick to add that his preference is still in the field of engineering.
Boustead today is very different from the company that began 180 years ago in a Raffles Place office that overlooked the Singapore harbour. It now operates from a nondescript flatted factory in Kampong Ubi.
However, Mr Wong believes Boustead's lasting legacy is not in the bricks and mortar, but in its founder's spirit of enterprise.
He declared: 'My mission is to resurrect this company and I'd like to tell my fellow Singaporeans that we are doing well.'
Failure is not an option.
'It's like your great-great-grandfather's company that passes on to your hand. Can you imagine if you fail and die? It's not just a matter of money.'
The number eight plays a prominent role in the life and death of Mr Edward Boustead, said Mr Wong, the company's chief executive.
'His affinity to the number 'eight' is uncanny,' Mr Wong told The Straits Times.
The Chinese, particularly the Cantonese, regard eight as an auspicious number as it rhymes with wealth in that dialect.
Born in Yorkshire, England in 1800, Mr Boustead died at the age of 88 in 1888 in his homeland.
He had arrived in Singapore in 1828 and set up Boustead & Co. The company quickly took off to become one of Singapore's great trading houses, dealing in spices, flavours, seeds, nuts, herbs and oils.
Its interests subsequently extended to include rubber and palm oil plantations, trading and agencies for a whole host of services such as shipping and insurance.
'We were the sole agents for insurance giant Lloyds and big marine insurance companies in the world,' Mr Wong said.
'Hennessy, Procter & Gamble, Cadbury, most of the consumer goods that you see today, Boustead brought them in.'
This year, the company - now known as Boustead Singapore - celebrates its 180th anniversary, making it the second oldest in Singapore. Only property developer Guthrie GTS can claim to be older.
To mark the milestone, Boustead will hold a gala dinner next month. It has commissioned a limited edition coffee table book on the history of the company.
It will also use the occasion to donate $800,000 - that uncanny number again - to charity, an acknowledgement of the philanthropic legacy of the founder, said Mr Wong.
Upon his death, Mr Boustead left £9,000 - a princely sum at the time - to set up a welfare institution for foreign seaman known as the Boustead Institute.
Demolished and long faded in the annals of Singapore history, the institute is, nonetheless, immortalised in many paintings and pictures thanks to its striking architecture and imposing facade at the junction of Tanjong Pagar and Anson roads.
Mr Boustead did not have any heirs. After his death, his associates took over the running of Boustead & Co, which continued to enjoy unparalleled success for almost a 100 years except for when the two world wars were ongoing.
However, the company's fortunes did wane when it was broken up, twice.
In 1960, it was split into Boustead plc and Boustead Bhd following Malaysia's independence from Britain. The substantive part of the business remained in Malaysia and Singapore.
In 1973, Boustead Bhd carved out a Singapore unit - Taiping Singapore - to comply with Malaysia's race-based affirmative programme which was aimed at narrowing the wealth gap between Malays and Chinese.
The loss of plantation assets, which continued to reside with Boustead Bhd, was a near fatal blow to the Singapore unit as it also had to struggle with losing many of its agency businesses.
Then came another round of mergers and acquisitions after which Taiping became Bousteadco Singapore and was subsequently renamed Boustead Singapore.
During this uncertain period, it tried without much success to reinvent itself as an engineering outfit until 1996, when a group led by Mr Wong assumed control.
Banking on his experience as former managing director of QAF - the maker of Gardenia bread - Mr Wong's initial instinct was to turn Boustead into a food company.
In 1998, it started the Bonjour line of breads and a year later, it acquired the Japanese firm Sushi Deli.
But the foray into food was short-lived. Bonjour was sold to QAF for $15 million in 2000 and Sushi Deli was offloaded to Mr Wong and two managers of the Japanese restaurant for just $340 in 2003.
Today, Boustead's focus is on industrial, real estate, energy and environmental engineering. It has a staff strength of about 700 and operates in 73 countries.
While the current business has little in common with the early enterprises that made Boustead famous, its brand name continues to reap goodwill even from afar.
Take for example a trip Mr Wong made to Sri Lanka three years ago, after a Boustead unit had secured a deal to build the first sea water treatment plant in the country.
'While I was there to introduce other services of Boustead, I met the director-general in charge of power. He said to me: 'Your company was the first to introduce electricity to our country.' Indeed!'
Boustead's success is reflected in its healthy bottom line and cash holdings.
In the year ended March 31, the group reported a 46.1 per cent jump in net profit to $51.5 million. Revenue was up 27.5 per cent at $438.3 million. Its net cash position swelled to $150.8 million, up from $100.7 million the previous year.
This has enabled the company to raise full-year dividend payouts to 10 cents a share from 6.5 cents.
Dividend yield is an attractive 4.3 per cent.
Despite this, Boustead shares are off the radar screen of most retail investors, with daily average turnover at a paltry 74,000.
Mr Wong is not unduly perturbed.
'I've been through hot stocks before. QAF was a hot stock in 1993 to 1995, with 50 million shares in turnover daily, and I got queries from the stock exchange every day.
'Today, I don't get calls. Nobody is interested. Never mind, we have very stable shareholders.'
Nonetheless, the company recognises its stock could do with a little lift. It has proposed undertaking a one-into-two share split to make the stock more attractive to retail investors.
A healthy cash hoard means that Boustead is also in a position to grow more aggressively.
'We are in the phase of looking for acquisitions and not afraid of businesses that are not exactly core. If it's a buy, why not?,' Mr Wong asserted, though he is quick to add that his preference is still in the field of engineering.
Boustead today is very different from the company that began 180 years ago in a Raffles Place office that overlooked the Singapore harbour. It now operates from a nondescript flatted factory in Kampong Ubi.
However, Mr Wong believes Boustead's lasting legacy is not in the bricks and mortar, but in its founder's spirit of enterprise.
He declared: 'My mission is to resurrect this company and I'd like to tell my fellow Singaporeans that we are doing well.'
Failure is not an option.
'It's like your great-great-grandfather's company that passes on to your hand. Can you imagine if you fail and die? It's not just a matter of money.'
Monday, June 30, 2008
China plays offer cheap buys but few are biting; Bargains can be found, say analysts, despite impact of volatile mainland
INVESTORS might imagine that Singapore-listed China companies would offer some form of a safe haven from current stock market turbulence.
After all, China's economy is still expanding strongly, despite some niggles, while the likes of the United States are faltering.
They should think again.
A recent sell-down in stocks on China bourses and growing inflation worries over the mainland's booming economy have hit these so-called S-chips fairly hard.
The selling pressure has also been triggered by concerns over slowing profit growth, shrinking margins and rising borrowing costs.
So far this year, the FTSE ST China Index, comprising major S-chips, has been the worst performing index. It has fallen over 44 per cent compared to a 14.7 per cent drop for the Straits Times Index.
Current valuations of some stocks, which are trading at low single-digit price-to-earnings ratios, are very attractive, say analysts. This ratio shows how much investors are willing to pay per dollar of earnings. The lower the ratio is, the 'cheaper' the share.
For example, China Sky Chemical Fibre, Celestial NutriFoods and Sino Techfibre are trading at ratios of four to five times their most recent full- year earnings.
'How can you say that is expensive?' asked CIMB-GK analyst Ho Choon Seng. 'Margins are not exactly expanding. With inflation, it is difficult to significantly increase margins. But there is still value to be found.'
'While higher energy, labour and material costs are likely to have an impact on margins for most companies, most are expected to remain profitable and many should still show profit growth - albeit at a lower rate,' said DBS Vickers Securities analyst Paul Yong.
He explained that a combination of poorer-than-expected results as well as corporate governance issues may have exacerbated the price slide of some stocks.
Despite what seems to be a good deal, investors are not biting. Take companies such as Jiutian Chemical Group and frozen dumpling maker Synear Food Holdings which are trading at 80 per cent or more off their 52-week highs.
A remisier with a local brokerage said: 'There are bargains out there, but there's almost no buying interest.'
She added: 'Investors are losing interest partly because there is no breakthrough for most S-chips. The trading range is very tight. Stocks barely budge even when there's good news.'
Clients are now switching to blue chips from S-chips, she said, adding that while there are fewer lots, 'at least there's a range to trade'.
S-chips have also fallen out of favour with syndicates, say sources, which have scaled back trading after suffering substantial losses.
Questions remain as to when the China plays will be able to break the downtrend, which is in turn dependent on the performance of markets in the US and China.
China Life Insurance, China's largest insurer, this week reportedly snapped up large quantities of stock funds, which may signal that there are bargains out there.
Analysts expect the downside to be limited given the extent of declines seen in many S-shares.
A hike of energy prices will push China's inflation 'into double digits', said a BNP Paribas report. It expects at least one more hike before year- end. This may further trigger a sell-down in Chinese bourses.
In a market where prices are static, or falling, it may be a good idea for investors to look for high-yield stocks.
Examples would include China Life and Singapore-listed Memtech International, which have dividend yields of 7.7 per cent and 9 per cent respectively. Mainboard-listed Luzhou Bio-Chem Technology is also offering a 7 per cent dividend yield.
'High-yield stocks should generally outperform high beta stocks in a bear market,' said Mr Yong. Beta stocks carry more risk but have potentially higher returns.
'Given low interest rates, there could be more interest in companies with high dividends,' said Mr Ho. But he added that investors should also consider the growth prospects of the company and whether it is able to support the level of dividend.
After all, China's economy is still expanding strongly, despite some niggles, while the likes of the United States are faltering.
They should think again.
A recent sell-down in stocks on China bourses and growing inflation worries over the mainland's booming economy have hit these so-called S-chips fairly hard.
The selling pressure has also been triggered by concerns over slowing profit growth, shrinking margins and rising borrowing costs.
So far this year, the FTSE ST China Index, comprising major S-chips, has been the worst performing index. It has fallen over 44 per cent compared to a 14.7 per cent drop for the Straits Times Index.
Current valuations of some stocks, which are trading at low single-digit price-to-earnings ratios, are very attractive, say analysts. This ratio shows how much investors are willing to pay per dollar of earnings. The lower the ratio is, the 'cheaper' the share.
For example, China Sky Chemical Fibre, Celestial NutriFoods and Sino Techfibre are trading at ratios of four to five times their most recent full- year earnings.
'How can you say that is expensive?' asked CIMB-GK analyst Ho Choon Seng. 'Margins are not exactly expanding. With inflation, it is difficult to significantly increase margins. But there is still value to be found.'
'While higher energy, labour and material costs are likely to have an impact on margins for most companies, most are expected to remain profitable and many should still show profit growth - albeit at a lower rate,' said DBS Vickers Securities analyst Paul Yong.
He explained that a combination of poorer-than-expected results as well as corporate governance issues may have exacerbated the price slide of some stocks.
Despite what seems to be a good deal, investors are not biting. Take companies such as Jiutian Chemical Group and frozen dumpling maker Synear Food Holdings which are trading at 80 per cent or more off their 52-week highs.
A remisier with a local brokerage said: 'There are bargains out there, but there's almost no buying interest.'
She added: 'Investors are losing interest partly because there is no breakthrough for most S-chips. The trading range is very tight. Stocks barely budge even when there's good news.'
Clients are now switching to blue chips from S-chips, she said, adding that while there are fewer lots, 'at least there's a range to trade'.
S-chips have also fallen out of favour with syndicates, say sources, which have scaled back trading after suffering substantial losses.
Questions remain as to when the China plays will be able to break the downtrend, which is in turn dependent on the performance of markets in the US and China.
China Life Insurance, China's largest insurer, this week reportedly snapped up large quantities of stock funds, which may signal that there are bargains out there.
Analysts expect the downside to be limited given the extent of declines seen in many S-shares.
A hike of energy prices will push China's inflation 'into double digits', said a BNP Paribas report. It expects at least one more hike before year- end. This may further trigger a sell-down in Chinese bourses.
In a market where prices are static, or falling, it may be a good idea for investors to look for high-yield stocks.
Examples would include China Life and Singapore-listed Memtech International, which have dividend yields of 7.7 per cent and 9 per cent respectively. Mainboard-listed Luzhou Bio-Chem Technology is also offering a 7 per cent dividend yield.
'High-yield stocks should generally outperform high beta stocks in a bear market,' said Mr Yong. Beta stocks carry more risk but have potentially higher returns.
'Given low interest rates, there could be more interest in companies with high dividends,' said Mr Ho. But he added that investors should also consider the growth prospects of the company and whether it is able to support the level of dividend.
Rogers Tells Investors Not to `Give Up' on China stocks
June 28 (Bloomberg) -- Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, told investors not to ``give up'' on Chinese shares after the country's stock index fell almost 50 percent this year.
``Start buying when others say `never again','' Rogers, 65, said today at an investor conference in Nanjing. There is ``much money to be made'' from investments in Chinese stocks, he said.
China's CSI 300 Index has slumped 52 percent from its Oct. 16 peak on concern government measures to curb consumer prices will hurt earnings growth. Rogers, who first started buying Chinese stocks in 1999, said he hasn't sold any of his holdings.
``It's still a growth story in China,'' said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd. ``It still has a good manufacturing industry.''
China's economy expanded 10.6 percent in the first quarter even as export growth cooled and industrial companies' profit growth slowed as oil and gas costs surged. Chinese stocks slumped yesterday on speculation the government will increase interest rates to help tame inflation.
Rogers told Chinese investors that the current correction is ``the way the market works,'' and they shouldn't be a ``market timer'' trying to figure out when is the bottom. ``You should get in at a time like now,'' Rogers said. ``I'm starting to think about buying again.'' He said he'd be ``investing in China for the rest of the century.''
About 200 people -- a full house -- paid as much as 50,000 yuan ($7,300) to hear Rogers speak at the two-hour event. The cheapest ticket was 3,800 yuan. Some approached him for his autograph and photos after the speech.
`Learn About Commodities'
Investors should also ``learn about commodities,'' Rogers said. Oil prices, which reached a record in New York trading yesterday, will go higher, he said.
Crude oil for August delivery rose 57 cents, or 0.4 percent, to a record close of $140.21 a barrel yesterday on the New York Mercantile Exchange, extending its gain this year to 46 percent.
The price of oil will keep rising, ``unless someone finds a major oil field very quickly, in accessible areas,'' Rogers told Chinese investors. ``The oil trend is still high even though the U.S. is trying to curb oil speculation,'' said Sullivan.
Rogers told investors to ``stay away from'' the dollar. The U.S. currency is within 2 percent of a record low against the euro reached in April as the Federal Reserve has cut interest rates to stave off an economic recession.
U.S. stocks ``are going to go down,'' Rogers said. The Dow Jones Industrial Average fell 0.9 percent yesterday, extending the decline for the 30-stock measure to 10 percent this month, the worst June since 1930.
The U.S. may be in its ``worst recession since World War II,'' Rogers said, adding that the subprime mortgage crisis in the world's biggest economy ``has many years to go.''
``Start buying when others say `never again','' Rogers, 65, said today at an investor conference in Nanjing. There is ``much money to be made'' from investments in Chinese stocks, he said.
China's CSI 300 Index has slumped 52 percent from its Oct. 16 peak on concern government measures to curb consumer prices will hurt earnings growth. Rogers, who first started buying Chinese stocks in 1999, said he hasn't sold any of his holdings.
``It's still a growth story in China,'' said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd. ``It still has a good manufacturing industry.''
China's economy expanded 10.6 percent in the first quarter even as export growth cooled and industrial companies' profit growth slowed as oil and gas costs surged. Chinese stocks slumped yesterday on speculation the government will increase interest rates to help tame inflation.
Rogers told Chinese investors that the current correction is ``the way the market works,'' and they shouldn't be a ``market timer'' trying to figure out when is the bottom. ``You should get in at a time like now,'' Rogers said. ``I'm starting to think about buying again.'' He said he'd be ``investing in China for the rest of the century.''
About 200 people -- a full house -- paid as much as 50,000 yuan ($7,300) to hear Rogers speak at the two-hour event. The cheapest ticket was 3,800 yuan. Some approached him for his autograph and photos after the speech.
`Learn About Commodities'
Investors should also ``learn about commodities,'' Rogers said. Oil prices, which reached a record in New York trading yesterday, will go higher, he said.
Crude oil for August delivery rose 57 cents, or 0.4 percent, to a record close of $140.21 a barrel yesterday on the New York Mercantile Exchange, extending its gain this year to 46 percent.
The price of oil will keep rising, ``unless someone finds a major oil field very quickly, in accessible areas,'' Rogers told Chinese investors. ``The oil trend is still high even though the U.S. is trying to curb oil speculation,'' said Sullivan.
Rogers told investors to ``stay away from'' the dollar. The U.S. currency is within 2 percent of a record low against the euro reached in April as the Federal Reserve has cut interest rates to stave off an economic recession.
U.S. stocks ``are going to go down,'' Rogers said. The Dow Jones Industrial Average fell 0.9 percent yesterday, extending the decline for the 30-stock measure to 10 percent this month, the worst June since 1930.
The U.S. may be in its ``worst recession since World War II,'' Rogers said, adding that the subprime mortgage crisis in the world's biggest economy ``has many years to go.''
'Toxic' issues drag down small caps
Convertible bonds depress shares when funds unload for quick profit
A controversial debt instrument blamed overseas for sending small caps' share prices into a 'death spiral' is now raising a stink in the local stock market.
These 'instruments of mass destruction', as one banker calls them, are a type of low- or zero-coupon convertible bond that can be converted into shares at a discount - usually 10 per cent - to the average share price in a look-back period, rather than only at a premium, as is normal.
In the past 12 months, at least 20 small cap companies here have issued 'death-spiral' convertibles - so named by detractors because shares converted at a discount are quickly sold for a near certain profit, often depressing the share price as a result. The issuance is typically divided into several tranches.
As each trance gets converted, the price spirals downwards, both diluting and eroding the value of existing shareholders' holdings.
A fund offering to subscribe to such issues gets two discounts - first, because they can look back in a period (usually 25 or 30 days) and select the lowest prices; and second, because they can convert notes into shares at 90 per cent of that price.
And since the conversion price is floating - it falls with the share price - the number of new shares issued to the subscribing fund balloons as the share price shrinks every time it converts a fixed-value note.
Such 'toxic' issues were first seen here about five or six years ago, according to sources. But recently, and especially since last year, activity has accelerated considerably.
By far the most active in the convertible note market is Pacific Capital Investment Management (PCIM), a UK-based fund that has been assiduously courting tiny, cash-hungry listed companies and which has ramped up its lending in the past 10 months or so. So far it has signed agreements to pump in up to $500 million to about 15 companies.
Others in the market are local-based Value Capital Asset Management, the Cayman Islands-registered Advance Opportunities Fund and Delaware-registered DB Zwirn Asia Pacific Special Opportunities Fund.
Companies often have little choice. Many don't have easy access to capital markets and find it hard to do share placements or rights issues. Banks are often unwilling to lend to them, or do so only at punitively high interest rates.
And the sums on offer can be hard to turn down. Companies with market caps of less than $200 million were inking deals for between $6 and $60 million. Jade Technologies, then diversifying into the energy business, was mulling an issue worth up to $150 million.
But bosses say disillusionment was quick to come. 'What we didn't expect is that they take the (converted) shares, then they quickly dump it in the market,' says one company chairman, pointing out that the agreement allows the fund to convert shares at its own discretion.
As the principal amount is typically split into between eight and 40 tranches, the convert-and-sell cycle could play out repeatedly - a heavy recurring overhang on the stock. 'So every week you will have this selling pressure on your share price,' the chairman says.
According to an industry source, each cycle could net the fund 2 to 5 per cent profit, and with relatively modest initial outlay - returns from one cycle could be used to subscribe for a subsequent tranche.
Many companies say they have seen their shares crash to single digit level - especially as in many cases, they were not assured of a minimum conversion price.
Alantac, over 50 cents last July, is now at 13 cents. HLH Group, worth 10 cents a share a year ago, is now at three cents. Lexicon's share price has fallen 80 per cent and Vibropower has lost half its value since subscription agreements were announced.
But company and industry sources say it's difficult to quantify the damage done by toxic issues.
An investment banking source says that in a good market such deals could actually work to the company's benefit, as strong investor demand may be able to absorb the constant dilution.
The trouble, he points out, is that equity markets in the past six months have been lacklustre. 'When the normal volume is a few hundred lots and the fund is selling five or 10 million shares all the time, then the share price will collapse,' he says.
Part of the damage may have been caused by investors seeing the issue of such notes as a sign of distress, as well as generally soured investor sentiment in recent months.
But tellingly, a number of companies have either terminated deals or declined to take up optional tranches. EMS Energy and Equation Corp cancelled deals before they began, but HLH Group issued 607.3 million shares to PCIM before backing out in March and paying 'all associated fees and costs'.
This year, Anwell, Centillion Environment & Recycling and E3 Holdings have all agreed to reduce the number of tranches issued.
Company chiefs ruefully admit they had been naive in expecting that the subscribing fund would hold on to converted shares for longer term gain. One chief executive officer says he was not very clear about convertible bonds and how they could be structured.
'We didn't know their method,' says another, adding, 'I thought it was just like a share placement deal.'
Toxic convertibles originated in the US in the 1990s and were widely used by dotcoms to finance expansion. In Hong Kong, they first made an appearance in the early 2000s. David Webb, a Hong Kong-based activist, told BT the flow of issues there was 'pretty much killed' by his 2005 article highlighting a number of deals done by Credit Suisse First Boston.
A controversial debt instrument blamed overseas for sending small caps' share prices into a 'death spiral' is now raising a stink in the local stock market.
These 'instruments of mass destruction', as one banker calls them, are a type of low- or zero-coupon convertible bond that can be converted into shares at a discount - usually 10 per cent - to the average share price in a look-back period, rather than only at a premium, as is normal.
In the past 12 months, at least 20 small cap companies here have issued 'death-spiral' convertibles - so named by detractors because shares converted at a discount are quickly sold for a near certain profit, often depressing the share price as a result. The issuance is typically divided into several tranches.
As each trance gets converted, the price spirals downwards, both diluting and eroding the value of existing shareholders' holdings.
A fund offering to subscribe to such issues gets two discounts - first, because they can look back in a period (usually 25 or 30 days) and select the lowest prices; and second, because they can convert notes into shares at 90 per cent of that price.
And since the conversion price is floating - it falls with the share price - the number of new shares issued to the subscribing fund balloons as the share price shrinks every time it converts a fixed-value note.
Such 'toxic' issues were first seen here about five or six years ago, according to sources. But recently, and especially since last year, activity has accelerated considerably.
By far the most active in the convertible note market is Pacific Capital Investment Management (PCIM), a UK-based fund that has been assiduously courting tiny, cash-hungry listed companies and which has ramped up its lending in the past 10 months or so. So far it has signed agreements to pump in up to $500 million to about 15 companies.
Others in the market are local-based Value Capital Asset Management, the Cayman Islands-registered Advance Opportunities Fund and Delaware-registered DB Zwirn Asia Pacific Special Opportunities Fund.
Companies often have little choice. Many don't have easy access to capital markets and find it hard to do share placements or rights issues. Banks are often unwilling to lend to them, or do so only at punitively high interest rates.
And the sums on offer can be hard to turn down. Companies with market caps of less than $200 million were inking deals for between $6 and $60 million. Jade Technologies, then diversifying into the energy business, was mulling an issue worth up to $150 million.
But bosses say disillusionment was quick to come. 'What we didn't expect is that they take the (converted) shares, then they quickly dump it in the market,' says one company chairman, pointing out that the agreement allows the fund to convert shares at its own discretion.
As the principal amount is typically split into between eight and 40 tranches, the convert-and-sell cycle could play out repeatedly - a heavy recurring overhang on the stock. 'So every week you will have this selling pressure on your share price,' the chairman says.
According to an industry source, each cycle could net the fund 2 to 5 per cent profit, and with relatively modest initial outlay - returns from one cycle could be used to subscribe for a subsequent tranche.
Many companies say they have seen their shares crash to single digit level - especially as in many cases, they were not assured of a minimum conversion price.
Alantac, over 50 cents last July, is now at 13 cents. HLH Group, worth 10 cents a share a year ago, is now at three cents. Lexicon's share price has fallen 80 per cent and Vibropower has lost half its value since subscription agreements were announced.
But company and industry sources say it's difficult to quantify the damage done by toxic issues.
An investment banking source says that in a good market such deals could actually work to the company's benefit, as strong investor demand may be able to absorb the constant dilution.
The trouble, he points out, is that equity markets in the past six months have been lacklustre. 'When the normal volume is a few hundred lots and the fund is selling five or 10 million shares all the time, then the share price will collapse,' he says.
Part of the damage may have been caused by investors seeing the issue of such notes as a sign of distress, as well as generally soured investor sentiment in recent months.
But tellingly, a number of companies have either terminated deals or declined to take up optional tranches. EMS Energy and Equation Corp cancelled deals before they began, but HLH Group issued 607.3 million shares to PCIM before backing out in March and paying 'all associated fees and costs'.
This year, Anwell, Centillion Environment & Recycling and E3 Holdings have all agreed to reduce the number of tranches issued.
Company chiefs ruefully admit they had been naive in expecting that the subscribing fund would hold on to converted shares for longer term gain. One chief executive officer says he was not very clear about convertible bonds and how they could be structured.
'We didn't know their method,' says another, adding, 'I thought it was just like a share placement deal.'
Toxic convertibles originated in the US in the 1990s and were widely used by dotcoms to finance expansion. In Hong Kong, they first made an appearance in the early 2000s. David Webb, a Hong Kong-based activist, told BT the flow of issues there was 'pretty much killed' by his 2005 article highlighting a number of deals done by Credit Suisse First Boston.
Saturday, June 28, 2008
尚达曼：亚洲应紧缩货币政策
财政部长尚达曼表示，亚洲经济有必要紧缩货币政策，来对抗通货膨胀，不过，手法必须是不断调整和循序渐进的。
尚达曼在银行公会的常年晚宴上表示，本区域现在所面对的最大挑战，就是如何在燃油和食品价格飙涨下，防范第二轮的通货膨胀。过去一年来，美国次优房贷、油价和食品价格节节上升，造成亚洲经济频频面对负面冲击。尚达曼相信，快速增长的亚洲经济不能仿效美国的利率政策，来对抗通膨。
财政部长尚达曼说，“大部分亚洲经济都避免大幅度调高利率，或者让汇率大幅度升值，是有原因的，因为(亚洲经济体)的衍生市场都不流通，企业和银行无法对风险进行护盘，同时欠缺可以进行风险管理的现代系统。”
部长还表示，利用津贴来应付油价上涨的做法，是行不通的，而我国将继续推行让新元缓步上涨的方式，来应付通膨压力；自2004年4月份以来，新币兑美元已经升值大约23%。
尚达曼在银行公会的常年晚宴上表示，本区域现在所面对的最大挑战，就是如何在燃油和食品价格飙涨下，防范第二轮的通货膨胀。过去一年来，美国次优房贷、油价和食品价格节节上升，造成亚洲经济频频面对负面冲击。尚达曼相信，快速增长的亚洲经济不能仿效美国的利率政策，来对抗通膨。
财政部长尚达曼说，“大部分亚洲经济都避免大幅度调高利率，或者让汇率大幅度升值，是有原因的，因为(亚洲经济体)的衍生市场都不流通，企业和银行无法对风险进行护盘，同时欠缺可以进行风险管理的现代系统。”
部长还表示，利用津贴来应付油价上涨的做法，是行不通的，而我国将继续推行让新元缓步上涨的方式，来应付通膨压力；自2004年4月份以来，新币兑美元已经升值大约23%。
Rent, Don't Buy, Your Home
Real-estate agents have been pushing the virtues of homeownership since homes were invented. Or since real-estate agents were invented, anyway. Paying a mortgage, they insist, is a can't-miss investment (the tax breaks, the appreciation, the thrill of fixing your own roof!). Renting is for simpletons who don't like keeping their own money.
But does owning a home really trump renting? With the economy stumbling, house prices falling, and credit tightening, many housing experts are questioning the conventional wisdom. "Over the last decade, it may have been true," says W. Van Harlow, an economist at the Fidelity Research Institute. "Clearly, there are periods where [the housing market] will dominate. But give this market correction another 18 months, and it may not be true anymore."
Not so hot. The housing boom produced endless stories of homeowners getting twice what they paid for their homes. But "prices don't always go up," says Jay Butler, director of realty studies at Arizona State University. Even a boomtown like Phoenix has seen median rates of appreciation climb only 4.6 percent a year since 1981. According to a Fidelity study published this year, the return on a dollar invested in real estate in 1963 barely beat that of a low-risk treasury bill.
When the housing market slumps—as it has every 10 or 15 years for the past several decades—homeownership becomes little more than renting, from a bank. Without appreciation, buying a $400,000 house—instead of renting the same property for, say, $2,000 a month—can turn into an expensive, potentially money-losing proposition. Assuming home prices come out of their death spiral (prices fell 4.5 percent in the third quarter compared with last year), they would still have to appreciate at 4 percent every year for a decade—even if rents climbed well above the rate of inflation—before a family would save more owning than renting. An $80,000 down payment could be invested instead in a mutual fund earning 8 percent, and housing comes with myriad other expenses, from maintenance to insurance to taxes, none of which build equity. Tax breaks do ease the pain. But with the average family staying in a house only six years, homeownership during a slump (especially in foreclosure pits like Las Vegas and Tampa, where prices have dropped more than 9 percent since last year) can look less and less like the American dream.
Renting, meanwhile, has its virtues. It's cheaper in the short term, it offers maximum flexibility, and it pushes the headaches of maintenance and taxes onto landlords. It can also be a sound long-term investment. According to Fidelity, if renters save even $300 a month—the difference, say, between their rent and a monthly mortgage payment—that money, invested in stocks growing at only 4 percent, could add up to $114,000 in 20 years. (And that's on top of earnings on a down payment that never had to be made.) "Over long horizons, if you reinvest the savings," Harlow says, "you're probably not going to find that much difference between renting and buying." Saving hasn't proved to be the national forte, of course. But with the bloom off the homeownership rose, it may have to be soon.
But does owning a home really trump renting? With the economy stumbling, house prices falling, and credit tightening, many housing experts are questioning the conventional wisdom. "Over the last decade, it may have been true," says W. Van Harlow, an economist at the Fidelity Research Institute. "Clearly, there are periods where [the housing market] will dominate. But give this market correction another 18 months, and it may not be true anymore."
Not so hot. The housing boom produced endless stories of homeowners getting twice what they paid for their homes. But "prices don't always go up," says Jay Butler, director of realty studies at Arizona State University. Even a boomtown like Phoenix has seen median rates of appreciation climb only 4.6 percent a year since 1981. According to a Fidelity study published this year, the return on a dollar invested in real estate in 1963 barely beat that of a low-risk treasury bill.
When the housing market slumps—as it has every 10 or 15 years for the past several decades—homeownership becomes little more than renting, from a bank. Without appreciation, buying a $400,000 house—instead of renting the same property for, say, $2,000 a month—can turn into an expensive, potentially money-losing proposition. Assuming home prices come out of their death spiral (prices fell 4.5 percent in the third quarter compared with last year), they would still have to appreciate at 4 percent every year for a decade—even if rents climbed well above the rate of inflation—before a family would save more owning than renting. An $80,000 down payment could be invested instead in a mutual fund earning 8 percent, and housing comes with myriad other expenses, from maintenance to insurance to taxes, none of which build equity. Tax breaks do ease the pain. But with the average family staying in a house only six years, homeownership during a slump (especially in foreclosure pits like Las Vegas and Tampa, where prices have dropped more than 9 percent since last year) can look less and less like the American dream.
Renting, meanwhile, has its virtues. It's cheaper in the short term, it offers maximum flexibility, and it pushes the headaches of maintenance and taxes onto landlords. It can also be a sound long-term investment. According to Fidelity, if renters save even $300 a month—the difference, say, between their rent and a monthly mortgage payment—that money, invested in stocks growing at only 4 percent, could add up to $114,000 in 20 years. (And that's on top of earnings on a down payment that never had to be made.) "Over long horizons, if you reinvest the savings," Harlow says, "you're probably not going to find that much difference between renting and buying." Saving hasn't proved to be the national forte, of course. But with the bloom off the homeownership rose, it may have to be soon.
Wednesday, June 25, 2008
长期持有，不卖怎么赚？
想做长期投资，却又陷入「是否要脱手卖掉」、「股价久未反映企业价值」的焦虑与內在冲突，原因在于尚未建立分享企业价值的透彻认知。
有句话是这样说的，「众鸟在林，不如一鸟在手」── 许多鸟在天上飞呀飞，看似缤纷精彩，但也只是过眼云烟，倒还不如手中紧抓一只，才是实际拥有。此话相当程度能夠反映许多人对于「长期持有」的恐惧。就像我们经常遇到法人资产管理者、或是个人投资人提到的疑问，「长期持有某支企业的股票，若沒有脱手变现，只是纸上富贵，风险是否在所难免，终究也无法享有其长期价值？」
这样的疑问，通常也伴随着这两种现实上的考量：「是否脱手卖掉、实现获利，才是财富成长的最佳选项？」；以及，「若市场股价迟迟尚未反映预估的企业內在价值（例如次级房贷事件造成的市场混乱），又该如何观之？」
这两大考量的探索与思考，对于有心长期持有的投资者而言，至为重要。原因在于，若沒有对「长期持有」与「內在价值」有清晰认知的话，则可能长期处在「该怎么办」的內在冲突；若能充分探讨与理解，心理建設足夠，往后在投资心态上会更有余裕、有定见。
■价值，以「自由现金流」为依归
要回答上述这两大考量，事实上都和两个字有关 ---「价值」，也就是以企业未來的现金流加以平均、折现而得出。企业的自由现金流（Free Cash Flow），就是企业在扣除掉所有的必需性支出后，实质上可以自由运用的钱。这是评估企业內在价值的最主要依归。
看好一间企业的长期內在价值、決定挹注资本、购入股权之后，事实上就是一位「不参与企业实际营运的合伙人」，此即巴菲特所采取的「事业导向」的投资方式。长期持有最重要的观念在于，企业所产生的价值，身为合伙人的你，无论是否出售持股，都可以分享其价值，而冒然出脱，反而会产生风险。
■冒然出脱实现获利，产生烦恼和风险
先看风险。
举例来说，假设计算出來，A企业的內在价值，有120元。然而，目前股价仅有45元(且短期內市场气氛悲观不太可能一飞沖天)，在40元就购入持有的你，可能会考量是否应该获利了结，先把5块钱现金拿回手上，比较妥当。
可是，这样一來，拿到这笔钱的你，可能就产生了新烦恼和新风险。
首先是拿回手上的现金，就必须开始對抗通膨，否则会日渐萎缩；另外，这笔拿回手上的现金，本身並不能再创造出价值（不能源源不绝提升你的购买能力），所以勢必要寻找新的投资机会，这样一来，就可能产生再投资风险（Reinvestment Risk，意即新投入的投资标的，可能未能创造如同A企业的获利、甚至可能赔钱）
■长期股东分享企业价值，无关股价波动
再看价值分享。
你可能会有疑问：「持有企业股份，又不似实际经营企业，怎么分享企业价值？」事实上，身为股东，所能获得的总体股东报酬（Total Returns to Shareholders，TRS），主要包含了「股价增值」和「股利」两部分。换言之，即使今天股价因为市场气氛因素，迟迟未反映其內在价值，股东仍可透过股利分享其內在价值，享有企业创造出来的营运利润，无关股价波东。
不过，就资本管理的角度而言，配发股息並非长期股东分享企业內在价值的最佳方式。除了前述拿到一笔钱所产生的再投资风险之外，要缴交的税务，也会在无形中损耗了投资效益。
所以，「将资金保留、不配发股息，而用于再投资，为股东创造更高价值」，是更令人欣赏的方式。你可以这样看：若是企业保留1块钱，能为股东创造出更高的价值，这样的保留就有意义。具体而言，Cash is king，但要看是谁用才夠力！你可以由企业财务报表上，拆解出企业的资本报酬率（Return On Investment Capital，ROIC），这个数值，是企业研究人员评量企业运用资本的能力，若是企业的资本报酬率比起你的机会成本还高(通常就是以你储蓄的最高利率來估，最中道)，那么企业保留股利、不配发，就有意义，这相当于企业里面有一群投资团队为你代劳，将你应得、却保留在企业里的资金，做更有效的投资运用。
因此像是巴菲特所负责的波克夏集团，即维持长年不配发股利的习惯。原因在于巴菲特有自信、也有能力，能将股东交予他代为运用的资金，化为资本、长期挹注到极佳的事业体，创造更高投资效益，而波克夏股东也乐见于此。换言之，一鸟在手，不如让群翼展翅，更能创造价值。
■投资，就是彰显你认同的价值观
即使短期內，长期看好的企业股价，受到市场气氛干扰，而无起色，都不需太过优心，因为那是属于金融层面的事情，与经济层面无关。只要是属于经济层面的企业经营、运作正常，持续有源源不绝的自由现金流产生，就代表企业价值並沒有受到毀损。就像是一位定期收到租金的房东，只要租金正常收到，就算房价有高低波东，又怎么愿意冒然将金鸡母脱手呢。
再进一步，试着想想看，作为长期投資者，可以透过股价增值、股利得到价值的回馈，即使企业采行不发放股利的政策，而将资金再投资于企业的成长，只要资本报酬率维持在高水准，那么长期而言，也会不断提升企业的自由現金流，带动企业的价值成长，这样不是很好吗？无论你是个人投资者或法人资产管理，这一种源源不绝的投资方式，都兼具了富足和永续的思维特质。当你建立了这样的认知，往后再接触到市场的波动或悲观气氛，你将会了解，这只是市场的不断循环，而现在，你已经有了足夠的视野和态度，足以彰显你所认同的投资价值观。
有句话是这样说的，「众鸟在林，不如一鸟在手」── 许多鸟在天上飞呀飞，看似缤纷精彩，但也只是过眼云烟，倒还不如手中紧抓一只，才是实际拥有。此话相当程度能夠反映许多人对于「长期持有」的恐惧。就像我们经常遇到法人资产管理者、或是个人投资人提到的疑问，「长期持有某支企业的股票，若沒有脱手变现，只是纸上富贵，风险是否在所难免，终究也无法享有其长期价值？」
这样的疑问，通常也伴随着这两种现实上的考量：「是否脱手卖掉、实现获利，才是财富成长的最佳选项？」；以及，「若市场股价迟迟尚未反映预估的企业內在价值（例如次级房贷事件造成的市场混乱），又该如何观之？」
这两大考量的探索与思考，对于有心长期持有的投资者而言，至为重要。原因在于，若沒有对「长期持有」与「內在价值」有清晰认知的话，则可能长期处在「该怎么办」的內在冲突；若能充分探讨与理解，心理建設足夠，往后在投资心态上会更有余裕、有定见。
■价值，以「自由现金流」为依归
要回答上述这两大考量，事实上都和两个字有关 ---「价值」，也就是以企业未來的现金流加以平均、折现而得出。企业的自由现金流（Free Cash Flow），就是企业在扣除掉所有的必需性支出后，实质上可以自由运用的钱。这是评估企业內在价值的最主要依归。
看好一间企业的长期內在价值、決定挹注资本、购入股权之后，事实上就是一位「不参与企业实际营运的合伙人」，此即巴菲特所采取的「事业导向」的投资方式。长期持有最重要的观念在于，企业所产生的价值，身为合伙人的你，无论是否出售持股，都可以分享其价值，而冒然出脱，反而会产生风险。
■冒然出脱实现获利，产生烦恼和风险
先看风险。
举例来说，假设计算出來，A企业的內在价值，有120元。然而，目前股价仅有45元(且短期內市场气氛悲观不太可能一飞沖天)，在40元就购入持有的你，可能会考量是否应该获利了结，先把5块钱现金拿回手上，比较妥当。
可是，这样一來，拿到这笔钱的你，可能就产生了新烦恼和新风险。
首先是拿回手上的现金，就必须开始對抗通膨，否则会日渐萎缩；另外，这笔拿回手上的现金，本身並不能再创造出价值（不能源源不绝提升你的购买能力），所以勢必要寻找新的投资机会，这样一来，就可能产生再投资风险（Reinvestment Risk，意即新投入的投资标的，可能未能创造如同A企业的获利、甚至可能赔钱）
■长期股东分享企业价值，无关股价波动
再看价值分享。
你可能会有疑问：「持有企业股份，又不似实际经营企业，怎么分享企业价值？」事实上，身为股东，所能获得的总体股东报酬（Total Returns to Shareholders，TRS），主要包含了「股价增值」和「股利」两部分。换言之，即使今天股价因为市场气氛因素，迟迟未反映其內在价值，股东仍可透过股利分享其內在价值，享有企业创造出来的营运利润，无关股价波东。
不过，就资本管理的角度而言，配发股息並非长期股东分享企业內在价值的最佳方式。除了前述拿到一笔钱所产生的再投资风险之外，要缴交的税务，也会在无形中损耗了投资效益。
所以，「将资金保留、不配发股息，而用于再投资，为股东创造更高价值」，是更令人欣赏的方式。你可以这样看：若是企业保留1块钱，能为股东创造出更高的价值，这样的保留就有意义。具体而言，Cash is king，但要看是谁用才夠力！你可以由企业财务报表上，拆解出企业的资本报酬率（Return On Investment Capital，ROIC），这个数值，是企业研究人员评量企业运用资本的能力，若是企业的资本报酬率比起你的机会成本还高(通常就是以你储蓄的最高利率來估，最中道)，那么企业保留股利、不配发，就有意义，这相当于企业里面有一群投资团队为你代劳，将你应得、却保留在企业里的资金，做更有效的投资运用。
因此像是巴菲特所负责的波克夏集团，即维持长年不配发股利的习惯。原因在于巴菲特有自信、也有能力，能将股东交予他代为运用的资金，化为资本、长期挹注到极佳的事业体，创造更高投资效益，而波克夏股东也乐见于此。换言之，一鸟在手，不如让群翼展翅，更能创造价值。
■投资，就是彰显你认同的价值观
即使短期內，长期看好的企业股价，受到市场气氛干扰，而无起色，都不需太过优心，因为那是属于金融层面的事情，与经济层面无关。只要是属于经济层面的企业经营、运作正常，持续有源源不绝的自由现金流产生，就代表企业价值並沒有受到毀损。就像是一位定期收到租金的房东，只要租金正常收到，就算房价有高低波东，又怎么愿意冒然将金鸡母脱手呢。
再进一步，试着想想看，作为长期投資者，可以透过股价增值、股利得到价值的回馈，即使企业采行不发放股利的政策，而将资金再投资于企业的成长，只要资本报酬率维持在高水准，那么长期而言，也会不断提升企业的自由現金流，带动企业的价值成长，这样不是很好吗？无论你是个人投资者或法人资产管理，这一种源源不绝的投资方式，都兼具了富足和永续的思维特质。当你建立了这样的认知，往后再接触到市场的波动或悲观气氛，你将会了解，这只是市场的不断循环，而现在，你已经有了足夠的视野和态度，足以彰显你所认同的投资价值观。
Tuesday, June 24, 2008
SMRT
Back on the Rails: Upgrade to Hold, Target S$1.88
Higher sustainable rail ridership — Raising estimates 13-15% for SMRT, on higher rail ridership growth, plus upside to high-margin advertising and rental income for FY09E operating margins of 13% and ROE of 23%. Government initiatives (increasing public transport usage, doubling of rail network, population increase) supports long-term growth. Risks: near-term high energy costs, and longer term whether the government introduces more competition in the rail space.
Target price S$1.88 — We have afforded SMRT a higher fair-value PER multiple of 17.8x (from 16x), equivalent to a P/BV of 4x, recognizing the rail story's structural growth drivers, stable and highly cash generative business, with recent dividend payouts of 78% of earnings (for a 5% dividend yield), plus the potential long-term growth upside for rail.
Circle Line — Unlike previous new lines, we are optimistic that full operation from 2010 of the Circle Line can be earnings accretive almost from the start due to higher ridership demand and scale benefits from the MRT network.
Long-term rail growth, but sector to be contestable — Land transport master plan prepares for population growth, encourages public transport usage, a doubling of the rail network. New lines Thomson and Eastern Region will be built, while existing North-South and East-West will be extended. The new lines could be opened to more competition.
Expected share price return 2.7%
Expected dividend yield 4.5%
Expected total return 7.3%
Market Cap S$2,773M
Stronger rail ridership trend: +13 to +15% EPS revisions
Target raised 27%: We upgrade SMRT to a Hold, with a new target of S$1.88 (from S$1.48). We raise earnings 13%-15% to reflect: [a] rail revenues raised c.6.5% to reflect a stronger growth trend in rail ridership, [b] c.15% higher revenues from advertising and rental business. We have raised ROE forecast to 23% on an improved operating margin assumption of 23% (from 21%). We no longer use a market multiple to set our target price for SMRT because we expect high-trend sustainable rail ridership growth to drive higher ROEs.
Higher target PE: We accord SMRT a higher PE of 17.8x, equivalent to a P/B of 4x, recognizing the rail story's structural growth drivers, namely estimated 2.5% pa population growth, govt. initiatives to increase use of public transport, and plans to more than double the length of the rail network by 2020. SMRT remains a highly cash generative business; it earns more than enough cashflow to meet annual capex needs and maintain near zero net balance sheet gearing, yet having paid out c.78% of its annual profits over the last few years.
Risks: Key risk to this outlook is rising cost pressures from [1] higher depreciation as SMRT embarks on bus acquisition and train upgrades, [2] rising diesel and electricity costs. The latter may threaten the current barely breakeven status of SMRT's bus, taxi and LRT franchises.
Circle Line: We view the Circle line (CCL), for which one stage should be ready in mid-CY09 (stepping up to full service over CY10), may be marginally profitable from the start given that it reaches a new pool of passengers in relatively highly populated areas, who currently may depend on bus, taxi or private car, and it will benefit from scale economies of the existing MRT lines.
Rail — MRT ridership moving to a higher growth trend
Rail remains SMRT's primary business driver, at 56% of group revenue in FY08 (to March 2008) and (with near 30% operating margins) 72% of operating profit. The key strength of SMRT's FY08 result was the better than trend MRT ridership growth of +7.6%yoy. This represents a step-up in trend growth from FY07 of +5.1% and just +2.8% for FY06 and FY05.
March 2008 quarter spurt: Quarterly data may point to the +11.2%yoy growth in the Mar 2008 qtr as an unusual growth spurt. Some of this was arguably due to "one-off" factors, notably Dec 2007's sharp hike in taxi fares, which not unexpectedly hurt taxi usage in the following months and led to switching to public transport. Although taxi usage has recovered we suspect that marginal users have permanently switched to public transport. The rising cost of petrol and further govt. moves to raise traffic congestion taxes (adding more ERP gantries and raising ERP rates) help to further explain why in Apr-May 2008 ridership continues to remain well above past trend growth rates.
Cyclical improvement in ridership: Beyond the most recent quarter, we would argue that there has been a cyclical uptrend in rail and other public transport usage. We can show this by looking at recent labour force growth trends.
Labour statistics over the past 2 years showed record numbers of job creation, most recently in 2007 with 235,000 new jobs (2006: 176,000, 2005: 113,000).
While a significant proportion of the labour force addition has been foreign workers, these are anecdotally at much lower income brackets than high salaried "expats" and hence are more likely to use rail and buses as their main mode of transport. Preliminary data for the Mar 2008 quarter was also another record quarter, adding 68,400 new jobs.
Drive to improve public transport usage; long-term population growth:
Looking forward, the government has set goals of increasing the share of public transport usage in peak hours and discouraging private car usage through further road congestion taxes (raising ERP rates, installing more ERP gantries and reducing the number of car park spaces in the central areas), as well as improving the efficiency and quality of service of the public transport system.
The govt. is also preparing for a presumed strong trend in population growth, as it plans to more than double the length of the rail network by 2020. We cover this in more detail in the Land Transport review section of this note.
Operational leverage: perhaps the most powerful part of this growth story has been the significant operating leverage that the rail business has enjoyed. In FY08, overall group rail revenues of S$445m represented a 5-yr CAGR of +2.6% over FY03. Rail operating profit by contrast surged fromS$46m in FY03 to S$129m in FY08, a 5-yr CAGR of 23%. One of the key reasons was that the rail system capacity had been underutilized, and the MRT was able to meet this ridership growth with minimal additional operating cost or capital expenditure.
As such rail operating margins rose from 11.7% in FY03 to 28.9% in FY08.
Even in the Mar 2008 quarter, SMRT continued to meet increased readership demand by increasing services frequency from the existing fleet of 106 trains that has remained unchanged for the past several years. In February 2008 an additional 87 weekly services were added to the morning peak period at a minimal additional annual cost of S$1m. In May 2008 a further 700 weekly train trips were added (at an approximate annual cost of S$5m) to capture higher demand during lunchtimes, weekends and off-peak periods. These incremental services within the existing capacity will further enhance operating margins. SMRT has a broad rule of thumb, that where the number of passenger per train trip rises above a range of 1,000-1,200 on a sustained basis then it will add further a further train trip. Mgmt. estimate that the MRT is probably running near full capacity in the morning peak period (approx. 7.30am – 8.45am), where the gap between train trips is just 2.5 minutes, but for other periods, including the evening peak (approx. 6pm-8pm), the gap between trips still remains above 2.5 minutes. Lunch waiting time post the new services has fallen to 3.5 minutes, while non-peak hours still average near 7minutes.
Projecting ridership and earnings for the Circle Line
When the Circle Line commences full operations during CY10, it will mark a significant increase in the length of SMRT's overall rail network. The current MRT network, comprising the North-South (in red) and East-West (green) lines, covers a combined route length of 89.4km and 51 stations, with a fleet of 106 six-car trains. The 33.3km, 29 station Circle Line is an orbital line linking existing MRT stations, which should help to alleviate some of the present peak time commuter crunch that occurs at the city centre MRT stations (Raffles Place and City Hall). A short extension of the East-West line from Boon Lay will also become operational during CY09.
Predicting ridership trends: This is largely guesswork at this stage but we are quite positive, based on the following observations:
Switching from other transport modes: While there may be some cannibalization of ridership from existing lines, we believe the net impact will be a ridership increase since the Circle Line is tapping new geographies that previously relied on bus, taxi or private car at the point of departure.
More central geography:
The experience of the North East line start-up in June 2003 operated by Comfort Delgro showed an immediate ridership population of about 190,000/day, with a sharp 10-15% annual increase thereafter. Arguably Circle Line could start at a higher ridership level than the NEL given the more central area it serves, plus Singapore has a larger population and the economy is in better shape than the conditions of 2003.
Lower breakeven:
Despite strong ridership pick-up, the NEL only broke even operating profit wise in 2006 once ridership averaged 260,000/day (May 2008 ridership is now at 340,000/day). We argue that due to scale and network benefits, CCL could actually reach breakeven at lower ridership levels, suggesting that even in the first full year of operation, the CCL could actually prove to be marginally profitable.
Ridership potential: A "mature" network such as the MRT had a FY2008 average daily ridership of 1.283m/day over its 89.4km network, or about 14,350 per km. On that simple math, a mature ridership for the 33.3km Circle Line in FY2008 terms could have been 478,000/day Earnings contribution: Based on current plans the so called "Stage 3" of the Circe Line (this segment connects with Bishan station on the North-South Line and comprises 5 stations on an approximate 6km stretch of line) should commence operations in mid-2009. Thereafter we expect stages 1,2,4 and 5 of the CCL to be launched through 2010. Assuming full service is achieved by Sept 2010 SMRT's FY2011 (to March 2011) financial year will have approximately half a year of full CCL operations and FY2012 the first fully financial year of service. In its first few years of operation the NEL made losses of S$33m, S$17m and S$6m, before breaking even in 2006. Conservatively, we have assumed annualized average daily ridership for the CCL to start at 200,000 in FY011, and we have assumed zero profit contribution (nor have we assumed any losses) for now.
LRT, bus and taxis likely to be barely breakeven businesses SMRT's other transport operations, the Bukit Panjang LRT, bus and taxis, simply lack the business scale of the main MRT rail network, and (for bus and LRT) serve mainly less well-populated areas of Singapore. As such these have at best remained marginal contributors to overall operating profit (or even small loss-makers), and we expect much of the same for our forecast period.
LRT: In FY08 operating losses had fallen for LRT to less than S$0.4m. Though less dramatic than for the MRT, average daily ridership for the Bukit Panjang LRT network grew 5.4%yoy to 41,400 in FY08, and +7.2%yoy for the Mar2008 quarter. Annual revenues rose 6.6%yoy to S$8.6m, having the operating loss to S$0.4m (FY07 S$1m loss). Mgt guidance suggests a ridership level of about 50,000 would take the operation to breakeven, which still appears to be a couple of years away.
Bus: The fall in FY08 bus profits S$1.5m (FY07: S$5.6m) was disappointing but not unexpected. SMRT's fleet of 800 buses saw average daily ridership of 757,700 in FY08, +2.3%yoy. Although this translated to revenue growth of +2.9%yoy to S$195.9m, the sharp drop in operating profit to S$1.5m from S$5.6m was largely due to the sharp increase in diesel fuel costs, particularly in the last six months. Careful mgmt of costs will be necessary to prevent the bus franchise falling into losses near term (4QFY08 bus operating profit was just S$164,000) as diesel fuel prices continued to rise since Mar 2008.
Taxi: The taxi franchise turned around from a meaningful S$5m loss in FY07 to a mall profit in FY08. Notwithstanding the impact of the Dec 2007 taxi fare hike, SMRT's fleet of 3,002 taxis enjoyed +20.4%yoy growth in taxis hired out of 2,719 (90.5% hired out rate) and a 10.8% rise in revenue to S$75.4m, translating into a small operating profit of S$0.6m. SMRT's taxi model is a rentals model (daily rentals range from S$65/day for a Nissan and S$78/day for a Toyota taxi to up to S$120/day for a Mercedes taxi). While SMRT provides diesel to it taxi drivers at cost (which is below retail price plus it buys in bulk) it does not provide a direct fuel subsidy.
Further revenue opportunities from advertising and rental
Despite being less than 8% of group revenues, advertising and retail space rental contributed a significant 25% to group operating profit in FY08, due to rich operating margins of 66% and 74% respectively. These businesses saw robust growth in FY2008, largely due to renovation and a more active usage of MRT hall space and trains, and mgmt are seeking further growth in FY09, given increased lettable space (post station refurbishments), and seeking new advertising space and media (such as the recently launched "Tunnel TV".
Advertising:
Revenues reached S$19.8m (+16.7%yoy) in FY08 (although Mar 2008 quarter revenues fell 3%yoy) from increased advertising on all modes of transport. Operating profit of S$13.1m was up 19%yoy.
Retail rental:
FY08 revenues grew 21.8%yoy to S$42m and operating profit +22.7%yoy to S$30.9m in line with a 20.3%yoy increase in total lettable space to 27,862 sq.m. This growth was due to the refurbishment of 26 MRT stations since FY05, with 4 more completed in the Mar 2008 quarter. Mgmt is guiding that rental revenue could increase by more than S$10m in FY09, but we have continued to conservatively assume a lower growth rate.
Engineering and other operations:
This segment made an operating profit of S$1.3m (down 65%yoy) on revenues of S$23.5m (+13%yoy). The sharp fall was likely due to diesel sales, which made an operating loss due to rising diesel prices. There were also higher project expenses, as SMRT embarked on its first overseas project, an operating and maintenance project to run the Palm Jumeirah Monorail project in Dubai. This will be a "cost-plus" contract fro
SMRT (so no participation in revenue upside) which is still in the consultancy phase. The monorail is expected to be fully operational from 1 April 2009, carrying up to 2,400 passengers per hour in four separate driverless trains of 3 cars per train.
Managing costs will be a key concern
We see 3 areas of cost growth that could hurt operating margins and overall business performance.
Electricity:
Electricity accounted for 47% of total energy-related cost in FY08.
SMRT signed a new 6-month contact for the Apr-Sep 2008 period at a 15% increase in rates with Senoko power. Electricity cost is expected to rise given record oil prices and we will have to monitor what further price increases will occur in the second half of the financial year.
Diesel:
Diesel prices mainly directly affect SMRT's bus division profits, as for taxis SMRT buys and sells on the diesel to its drivers at cost. Bus was barely break-even in the March quarter (S$0.164m) and since then average diesel prices have risen further.
Depreciation and capex:
SMRT has for several years maintained annual capex of just over S$100m in effect being maintenance capex. This has begun to move up recently, as it began from FY07 the mid-life upgrade of 66 of its 106 MRT trains (most of which date back to 1987), giving in effect a complete refurbishment of the train aside the engine and bogeys. This work will cost a total of S$143m and should be completed by end CY2008.
SMRT is also adding its fleet of 861 buses through the purchase of 67 new buses, with an estimated capex of S$20-30m. This will go towards meeting new Quality of service (QoS) standard introduced last year. The new buses, which include wheelchair facilities, will be delivered by 1QFY2009. about 179 of the existing bus fleet have undergone a mid-life upgrade, wit a plan to have upgraded 85% of the total fleet over the next 8 years.
Staff:
Staff costs have been growing at an underlying rate of 3%-4% annually.
SMRT's main headcount increase will be in the region of 100 in preparation of the Circle Line stage 3 opening.
Land Transport review — positives and negatives
Key positive— sustained higher rail ridership growth
Population growth: The higher trend rail ridership, one of the main reasons for our earnings upgrade of SMRT, we believe is here to stay for the long term. The key underpinning of this is growth in the Singapore population, which we estimate could grow over 25% from the present 4.6m to about 5.8m in approximately 13 years (+1.8%CAGR). While no specific population targets have been officially announced by the government, we infer this figure from the forecast 327,200 island wide residential units to be added in the next 10-15 years under the URA 2008 Master Plan. At an average of 3.7 persons per household (per the year 2000 Census) this translates into a population addition of just over 1.2m. Extending this argument further, this could see the Singapore labour force growing from 2.75m to over 3.42m (assuming a participation rate of 59%).
Increasing use of public transport: An explicit goal of the review is to increase
use of public transport during peak hours. In 2007 the share of public transport usage during was 63%, and it is targeted that this is increased to 70% by 2020. Simple math dictates that on this basis, public transport ridership could grow at a faster pace than the total population/labour force figure of about 2.5% per annum. This growth is of course also supported by the planned increase in the rail network, beyond the opening of the Circle Line.
Doubling the length of the rail network:
It is possible that these estimates will prove too conservative. The government will expand the rail network by building 2 new rail lines - the Thomson Line and Eastern Region Line. The Thomson line will travel from MarinA bay northwards to Ang Mo Kio and onward to Woodlands via Sin Ming, Kebun Baru, Thomson and Kim Seng.
From Marina Bay, the Thomson line will connect with another new MRT line, the Eastern Region Line. (ER). The ER line will serve Tanjong Rhu, Marine Parade, Siglap, Bedok South and Upper East Coast, and connect to Changi in the east. These 2 new lines will expand the network by 48km.
In addition the government aims to extend the North-South and East-West Lines, The North-South Line will extend beyond Marina Bay station with a 1-km extension to serve the Marina Bay area and the new cruise terminal in Marina South. The East-West Line will be extended by another 14km into Tuas.
The new lines and extensions will double Singapore’s rail network from 138km to 278km by 2020. The rail network will be able to carry 3 times as many journeys, rising from today’s 1.4 million a day to 4.6 million in 2020.
Key concern—network contestability
Affects both bus and rail: While these long term estimates look wholly positive for the rail industry, there's a potential concern for SMRT itself. As part of the overall review of the public transport system, the Transport Minister announced that the government intends to introduce contestability in both the bus and the rail sector. The reasoning behind the introduction of contestability appears to be premised on the idea that the threat of competition must be real to the current incumbents. For rail, one step is to have shorter operating licenses of 10 to 15 years instead of the existing 30-year licence periods.
No details were mentioned but the LTA will likely consult the operators on their plan for introducing contestability. The introduction of contestability into the bus and rail industries announced is a sea change in transport policy. It is difficult to assess the financial impact to the operators without further details.
However it can no longer be assumed that SMRT will automatically secure future MRT concessions (although we believe that existing concessions should continue to be honoured). Similarly Comfort’s dominance of the bus industry (where service route contracts are in effect renewal on a annul basis) in Singapore will likely be eroded.
Quants view: Glamor
SMRT Corp lies in the glamour quadrant of our value-momentum map with weak relative valuation and strong momentum scores. With a strong composite momentum backed by positive earnings revisions and long-term price momentum, the stock has moved back to and is now comfortably placed in the glamour quadrant.
On the momentum front, SMRT ranks higher than its peers both in the Singapore market and the Transportation sector. However, on the valuation front, the stock lags behind its peers in the Singapore market as well as in the Transportation sector.
From a systematic macro exposure analysis, SMRT being a low beta stock would hold its own in falling markets.
MRT:
SMRT's first licence to operate the MRT System was granted by Singapore’s Land Transport Authority (LTA) in August 1987 for a period of 10 years and was later extended to 31 March 1998. The current licence to operate the MRT System for a further period of 30 years came into force on 1 April 1998. The licence fee payable is 1.0% of the gross annual fare revenue.
SMRT Trains currently operates the North South and East West lines covering a combined route length of 89.4 kilometres serving 51 stations. Fleet of 106 trains, each of which comprises six cars. Present ridership c.1.28m/day
LRT:
SMRT was been granted a LOA by LTA to operate the LRT System commencing 6 November 1999 till 31 March 2028. LTA currently owns all the operating assets and infrastructure required to operate the LRT System. Ridership c.41,400/day Circle Line (CCL): SMRT Trains has been awarded a contract by LTA to operate the Circle Line for an initial period of 10 years from the date of its opening and to extend for an additional 30 years, subject to good performance. SMRT will operate the Circle Line when it commences revenue service in 2010 (it is also likely that one stage ("Stage 3") of the Circle Line will open as early as mid-2009). The 33.3 kilometres Circle Line is an orbital circuit that links all existing MRT lines to the city centre and is expected to significantly trim travelling times.
Boon Lay Extension: expected to be completed in 2009. Prior to the opening of Circle Line, the Boon Lay Extension, currently under construction, will extend the East West line westwards from Boon Lay station to serve the communities around Jurong West and Joo Koon Circle.
BUS
FY08 turnover S$196m (24% of total)
Operating profit S$1.5m (<1% operating margin)
Public Bus:
SMRT Buses operates a fleet of 861 buses, comprising 550 12-metre buses, and 311 18-metre Bendy buses.
SMRT operate 48 trunk services, 14 feeder services, six intratown services, one express service and seven NightRider services.
Private Bus : Bus-Plus Pte Ltd, which operates private bus and bus chartering services, manages a fleet of 59 buses. Bus-Plus runs seven condominium services, peak hour and scheduled services, and charter services for special events.
Avg. daily ridership reached 757,700/day in FY2008 (+2.3%yoy)
TAXI
FY08 turnover S$75m (9% of total)
Operating profit S$0.6m (<1% operating margin)
Number2 player: Singapore’s taxi industry has been undergoing a transformation since it was liberalised. The deregulation of taxi fares in September 1998 allowed taxi companies to set their own fares. In June 2003, limits on the number of taxi companies and their fleet sizes were lifted resulting in intense competition in the industry. SMRT Taxis has grown from a fleet of 1,889 taxis prior to liberalization to 3,002 taxis as at end March 2008.
OTHERS
Advertising and rental turnover S$62m (8% of total)
Operating profit S$45.7m (74% operating margin, 26% of total profit)
Engineering turnover S$24m (3% of total)
Operating profit S$1.3m (6% operating margin)
Advertising & rental of retail space:
Despite being less than 8% of group revenues, advertising and retail space rental contributed a significant 26% to group operating profit in FY2008, due to rich operating margins of 66% and 74% respectively. These businesses saw robust growth in FY2008, largely due to renovation and a more active usage of MRT hall space and trains, and mgmt are guiding for further good growth in these operations in FY2009.
Company description
A 54.5%-owned subsidiary of Temasek Holdings, SMRT Corporation listed on the Singapore Exchange on 26 July 2000. SMRT is a multi-modal transport service provider operating a mass rapid train system along a network of 97.2km of rail in Singapore, a scheduled bus service in the North Western part of Singapore and a fleet of 3,000 taxis. The group has been awarded the new Circle Line, which is expected to be operational in 2010. Bus and train fares are regulated by the Public Transport Council. To raise non-fare revenues, SMRT has been growing advertising and retail rental business in its stations.
Investment strategy
We rate SMRT Hold/Low Risk, with a target price of S$1.88, as relatively rich valuations can be justified by the recent trend of higher rail ridership growth and improving margins and ROEs. This growth should continue, although over the next two years higher staff, energy and depreciation costs could provide a slight drag as SMRT prepares to open the Circle Line by FY10. The longer-term outlook for rail ridership appears to be positive given robust underlying population growth, government initiatives to increase usage of public transport and plans to double the rail network by 2020. However, greater competition could also be introduced in the industry.
Valuation
We use an earnings-based measure, P/E, as our primary valuation measure, as the share price has historically been driven by the near-term earnings prospects of the group. Our target price of S$1.88 is based on a DDM-implied FY09E P/E of 17.8x with EPS of S$0.106, a payout ratio of 79%, DPS of S$0,083 and growth of 5%; equating to 4x P/B vs. a projected ROAE or 23%.
While admittedly a rich multiple, we think it is justified by improved growth prospects for rail and the company's commitment to a high dividend payout (recently c.78%), reflecting its strong cashflow generation and relatively stable business model. This valuation implicitly assumes that present rail concessions will be renewed at the end of their current lives.
We rate SMRT as Low Risk according to our quantitative risk-rating system, which tracks the historical 260-day volatility of shares. Upside and downside risks to our price target include: [a] Rail (and bus) ridership growth, which has reached a higher trend in recent years; [b] The extent of (government regulated) fare revisions for public buses and rail; [c] the success or otherwise of the Circle Line operations from FY10; [d] sharp rise or decline in electricity and diesel prices, which is a key component of operating costs; [e] ability to improve the profitability or otherwise of taxi, bus and LRT operations, each of which is barely breakeven or small loss makers; and [f] the execution of longterm government plans as laid out in its Land Transport review.
Closing Price
1: 28 Jun 05 *3 - 1.14
2: 26 Jul 05 *4 - 1.20
3: 9 Aug 05 *3 - NA
4: 30 Aug 05 *4 - 1.03
5: 13 Sep 05 *5 - 1.06
6: 27 Sep 05 *6 - 1.04
7: 11 Oct 05 *7 - 1.04
8: 19 Oct 05 *8 - 1.03
9: 29 Nov 05 *6 - 1.07
10: 5 Jan 06 *8 - 1.08
11: 6 Feb 06 *7 - 1.13
12: 17 Feb 06 *6 - 1.13
13: 28 Feb 06 *7 - 1.10
14: 16 Mar 06 *8 - 1.12
15: 18 Apr 06 *9 - 1.13
16: 28 Jun 06 *4 - 1.08
17: 12 Jul 06 *6 - 1.15
18: 5 Aug 06 *3 - 1.09
19: 9 Aug 06 *6 - 1.08
20: 19 Aug 06 *7 - 1.08
21: 7 Sep 06 *8 - 1.09
22: 16 Sep 06 *3 - 1.10
23: 4 Oct 06 *5 - 1.10
24: 16 Oct 06 *3 - 1.11
25: 5 Dec 06 *4 - 1.13
26: 22 Jan 07 *5 - 1.37
27: 11 May 07 *8 - 1.94
28: 6 Jun 07 *9 - 1.92
29: 7 Jul 07 *6 - 1.97
30: 3 Aug 07 *3 - 1.80
31: 2 Oct 07 *8 - 1.76
32: 6 Nov 07 *4 - 1.76
33: 7 Feb 08 *6 - NA
34: 6 Mar 08 *7 - 1.78
35: 3 Apr 08 *6 - 1.82
36: 14 May 08 *8 - 1.81
37: 3 Jun 08 *7 - 1.73
Higher sustainable rail ridership — Raising estimates 13-15% for SMRT, on higher rail ridership growth, plus upside to high-margin advertising and rental income for FY09E operating margins of 13% and ROE of 23%. Government initiatives (increasing public transport usage, doubling of rail network, population increase) supports long-term growth. Risks: near-term high energy costs, and longer term whether the government introduces more competition in the rail space.
Target price S$1.88 — We have afforded SMRT a higher fair-value PER multiple of 17.8x (from 16x), equivalent to a P/BV of 4x, recognizing the rail story's structural growth drivers, stable and highly cash generative business, with recent dividend payouts of 78% of earnings (for a 5% dividend yield), plus the potential long-term growth upside for rail.
Circle Line — Unlike previous new lines, we are optimistic that full operation from 2010 of the Circle Line can be earnings accretive almost from the start due to higher ridership demand and scale benefits from the MRT network.
Long-term rail growth, but sector to be contestable — Land transport master plan prepares for population growth, encourages public transport usage, a doubling of the rail network. New lines Thomson and Eastern Region will be built, while existing North-South and East-West will be extended. The new lines could be opened to more competition.
Expected share price return 2.7%
Expected dividend yield 4.5%
Expected total return 7.3%
Market Cap S$2,773M
Stronger rail ridership trend: +13 to +15% EPS revisions
Target raised 27%: We upgrade SMRT to a Hold, with a new target of S$1.88 (from S$1.48). We raise earnings 13%-15% to reflect: [a] rail revenues raised c.6.5% to reflect a stronger growth trend in rail ridership, [b] c.15% higher revenues from advertising and rental business. We have raised ROE forecast to 23% on an improved operating margin assumption of 23% (from 21%). We no longer use a market multiple to set our target price for SMRT because we expect high-trend sustainable rail ridership growth to drive higher ROEs.
Higher target PE: We accord SMRT a higher PE of 17.8x, equivalent to a P/B of 4x, recognizing the rail story's structural growth drivers, namely estimated 2.5% pa population growth, govt. initiatives to increase use of public transport, and plans to more than double the length of the rail network by 2020. SMRT remains a highly cash generative business; it earns more than enough cashflow to meet annual capex needs and maintain near zero net balance sheet gearing, yet having paid out c.78% of its annual profits over the last few years.
Risks: Key risk to this outlook is rising cost pressures from [1] higher depreciation as SMRT embarks on bus acquisition and train upgrades, [2] rising diesel and electricity costs. The latter may threaten the current barely breakeven status of SMRT's bus, taxi and LRT franchises.
Circle Line: We view the Circle line (CCL), for which one stage should be ready in mid-CY09 (stepping up to full service over CY10), may be marginally profitable from the start given that it reaches a new pool of passengers in relatively highly populated areas, who currently may depend on bus, taxi or private car, and it will benefit from scale economies of the existing MRT lines.
Rail — MRT ridership moving to a higher growth trend
Rail remains SMRT's primary business driver, at 56% of group revenue in FY08 (to March 2008) and (with near 30% operating margins) 72% of operating profit. The key strength of SMRT's FY08 result was the better than trend MRT ridership growth of +7.6%yoy. This represents a step-up in trend growth from FY07 of +5.1% and just +2.8% for FY06 and FY05.
March 2008 quarter spurt: Quarterly data may point to the +11.2%yoy growth in the Mar 2008 qtr as an unusual growth spurt. Some of this was arguably due to "one-off" factors, notably Dec 2007's sharp hike in taxi fares, which not unexpectedly hurt taxi usage in the following months and led to switching to public transport. Although taxi usage has recovered we suspect that marginal users have permanently switched to public transport. The rising cost of petrol and further govt. moves to raise traffic congestion taxes (adding more ERP gantries and raising ERP rates) help to further explain why in Apr-May 2008 ridership continues to remain well above past trend growth rates.
Cyclical improvement in ridership: Beyond the most recent quarter, we would argue that there has been a cyclical uptrend in rail and other public transport usage. We can show this by looking at recent labour force growth trends.
Labour statistics over the past 2 years showed record numbers of job creation, most recently in 2007 with 235,000 new jobs (2006: 176,000, 2005: 113,000).
While a significant proportion of the labour force addition has been foreign workers, these are anecdotally at much lower income brackets than high salaried "expats" and hence are more likely to use rail and buses as their main mode of transport. Preliminary data for the Mar 2008 quarter was also another record quarter, adding 68,400 new jobs.
Drive to improve public transport usage; long-term population growth:
Looking forward, the government has set goals of increasing the share of public transport usage in peak hours and discouraging private car usage through further road congestion taxes (raising ERP rates, installing more ERP gantries and reducing the number of car park spaces in the central areas), as well as improving the efficiency and quality of service of the public transport system.
The govt. is also preparing for a presumed strong trend in population growth, as it plans to more than double the length of the rail network by 2020. We cover this in more detail in the Land Transport review section of this note.
Operational leverage: perhaps the most powerful part of this growth story has been the significant operating leverage that the rail business has enjoyed. In FY08, overall group rail revenues of S$445m represented a 5-yr CAGR of +2.6% over FY03. Rail operating profit by contrast surged fromS$46m in FY03 to S$129m in FY08, a 5-yr CAGR of 23%. One of the key reasons was that the rail system capacity had been underutilized, and the MRT was able to meet this ridership growth with minimal additional operating cost or capital expenditure.
As such rail operating margins rose from 11.7% in FY03 to 28.9% in FY08.
Even in the Mar 2008 quarter, SMRT continued to meet increased readership demand by increasing services frequency from the existing fleet of 106 trains that has remained unchanged for the past several years. In February 2008 an additional 87 weekly services were added to the morning peak period at a minimal additional annual cost of S$1m. In May 2008 a further 700 weekly train trips were added (at an approximate annual cost of S$5m) to capture higher demand during lunchtimes, weekends and off-peak periods. These incremental services within the existing capacity will further enhance operating margins. SMRT has a broad rule of thumb, that where the number of passenger per train trip rises above a range of 1,000-1,200 on a sustained basis then it will add further a further train trip. Mgmt. estimate that the MRT is probably running near full capacity in the morning peak period (approx. 7.30am – 8.45am), where the gap between train trips is just 2.5 minutes, but for other periods, including the evening peak (approx. 6pm-8pm), the gap between trips still remains above 2.5 minutes. Lunch waiting time post the new services has fallen to 3.5 minutes, while non-peak hours still average near 7minutes.
Projecting ridership and earnings for the Circle Line
When the Circle Line commences full operations during CY10, it will mark a significant increase in the length of SMRT's overall rail network. The current MRT network, comprising the North-South (in red) and East-West (green) lines, covers a combined route length of 89.4km and 51 stations, with a fleet of 106 six-car trains. The 33.3km, 29 station Circle Line is an orbital line linking existing MRT stations, which should help to alleviate some of the present peak time commuter crunch that occurs at the city centre MRT stations (Raffles Place and City Hall). A short extension of the East-West line from Boon Lay will also become operational during CY09.
Predicting ridership trends: This is largely guesswork at this stage but we are quite positive, based on the following observations:
Switching from other transport modes: While there may be some cannibalization of ridership from existing lines, we believe the net impact will be a ridership increase since the Circle Line is tapping new geographies that previously relied on bus, taxi or private car at the point of departure.
More central geography:
The experience of the North East line start-up in June 2003 operated by Comfort Delgro showed an immediate ridership population of about 190,000/day, with a sharp 10-15% annual increase thereafter. Arguably Circle Line could start at a higher ridership level than the NEL given the more central area it serves, plus Singapore has a larger population and the economy is in better shape than the conditions of 2003.
Lower breakeven:
Despite strong ridership pick-up, the NEL only broke even operating profit wise in 2006 once ridership averaged 260,000/day (May 2008 ridership is now at 340,000/day). We argue that due to scale and network benefits, CCL could actually reach breakeven at lower ridership levels, suggesting that even in the first full year of operation, the CCL could actually prove to be marginally profitable.
Ridership potential: A "mature" network such as the MRT had a FY2008 average daily ridership of 1.283m/day over its 89.4km network, or about 14,350 per km. On that simple math, a mature ridership for the 33.3km Circle Line in FY2008 terms could have been 478,000/day Earnings contribution: Based on current plans the so called "Stage 3" of the Circe Line (this segment connects with Bishan station on the North-South Line and comprises 5 stations on an approximate 6km stretch of line) should commence operations in mid-2009. Thereafter we expect stages 1,2,4 and 5 of the CCL to be launched through 2010. Assuming full service is achieved by Sept 2010 SMRT's FY2011 (to March 2011) financial year will have approximately half a year of full CCL operations and FY2012 the first fully financial year of service. In its first few years of operation the NEL made losses of S$33m, S$17m and S$6m, before breaking even in 2006. Conservatively, we have assumed annualized average daily ridership for the CCL to start at 200,000 in FY011, and we have assumed zero profit contribution (nor have we assumed any losses) for now.
LRT, bus and taxis likely to be barely breakeven businesses SMRT's other transport operations, the Bukit Panjang LRT, bus and taxis, simply lack the business scale of the main MRT rail network, and (for bus and LRT) serve mainly less well-populated areas of Singapore. As such these have at best remained marginal contributors to overall operating profit (or even small loss-makers), and we expect much of the same for our forecast period.
LRT: In FY08 operating losses had fallen for LRT to less than S$0.4m. Though less dramatic than for the MRT, average daily ridership for the Bukit Panjang LRT network grew 5.4%yoy to 41,400 in FY08, and +7.2%yoy for the Mar2008 quarter. Annual revenues rose 6.6%yoy to S$8.6m, having the operating loss to S$0.4m (FY07 S$1m loss). Mgt guidance suggests a ridership level of about 50,000 would take the operation to breakeven, which still appears to be a couple of years away.
Bus: The fall in FY08 bus profits S$1.5m (FY07: S$5.6m) was disappointing but not unexpected. SMRT's fleet of 800 buses saw average daily ridership of 757,700 in FY08, +2.3%yoy. Although this translated to revenue growth of +2.9%yoy to S$195.9m, the sharp drop in operating profit to S$1.5m from S$5.6m was largely due to the sharp increase in diesel fuel costs, particularly in the last six months. Careful mgmt of costs will be necessary to prevent the bus franchise falling into losses near term (4QFY08 bus operating profit was just S$164,000) as diesel fuel prices continued to rise since Mar 2008.
Taxi: The taxi franchise turned around from a meaningful S$5m loss in FY07 to a mall profit in FY08. Notwithstanding the impact of the Dec 2007 taxi fare hike, SMRT's fleet of 3,002 taxis enjoyed +20.4%yoy growth in taxis hired out of 2,719 (90.5% hired out rate) and a 10.8% rise in revenue to S$75.4m, translating into a small operating profit of S$0.6m. SMRT's taxi model is a rentals model (daily rentals range from S$65/day for a Nissan and S$78/day for a Toyota taxi to up to S$120/day for a Mercedes taxi). While SMRT provides diesel to it taxi drivers at cost (which is below retail price plus it buys in bulk) it does not provide a direct fuel subsidy.
Further revenue opportunities from advertising and rental
Despite being less than 8% of group revenues, advertising and retail space rental contributed a significant 25% to group operating profit in FY08, due to rich operating margins of 66% and 74% respectively. These businesses saw robust growth in FY2008, largely due to renovation and a more active usage of MRT hall space and trains, and mgmt are seeking further growth in FY09, given increased lettable space (post station refurbishments), and seeking new advertising space and media (such as the recently launched "Tunnel TV".
Advertising:
Revenues reached S$19.8m (+16.7%yoy) in FY08 (although Mar 2008 quarter revenues fell 3%yoy) from increased advertising on all modes of transport. Operating profit of S$13.1m was up 19%yoy.
Retail rental:
FY08 revenues grew 21.8%yoy to S$42m and operating profit +22.7%yoy to S$30.9m in line with a 20.3%yoy increase in total lettable space to 27,862 sq.m. This growth was due to the refurbishment of 26 MRT stations since FY05, with 4 more completed in the Mar 2008 quarter. Mgmt is guiding that rental revenue could increase by more than S$10m in FY09, but we have continued to conservatively assume a lower growth rate.
Engineering and other operations:
This segment made an operating profit of S$1.3m (down 65%yoy) on revenues of S$23.5m (+13%yoy). The sharp fall was likely due to diesel sales, which made an operating loss due to rising diesel prices. There were also higher project expenses, as SMRT embarked on its first overseas project, an operating and maintenance project to run the Palm Jumeirah Monorail project in Dubai. This will be a "cost-plus" contract fro
SMRT (so no participation in revenue upside) which is still in the consultancy phase. The monorail is expected to be fully operational from 1 April 2009, carrying up to 2,400 passengers per hour in four separate driverless trains of 3 cars per train.
Managing costs will be a key concern
We see 3 areas of cost growth that could hurt operating margins and overall business performance.
Electricity:
Electricity accounted for 47% of total energy-related cost in FY08.
SMRT signed a new 6-month contact for the Apr-Sep 2008 period at a 15% increase in rates with Senoko power. Electricity cost is expected to rise given record oil prices and we will have to monitor what further price increases will occur in the second half of the financial year.
Diesel:
Diesel prices mainly directly affect SMRT's bus division profits, as for taxis SMRT buys and sells on the diesel to its drivers at cost. Bus was barely break-even in the March quarter (S$0.164m) and since then average diesel prices have risen further.
Depreciation and capex:
SMRT has for several years maintained annual capex of just over S$100m in effect being maintenance capex. This has begun to move up recently, as it began from FY07 the mid-life upgrade of 66 of its 106 MRT trains (most of which date back to 1987), giving in effect a complete refurbishment of the train aside the engine and bogeys. This work will cost a total of S$143m and should be completed by end CY2008.
SMRT is also adding its fleet of 861 buses through the purchase of 67 new buses, with an estimated capex of S$20-30m. This will go towards meeting new Quality of service (QoS) standard introduced last year. The new buses, which include wheelchair facilities, will be delivered by 1QFY2009. about 179 of the existing bus fleet have undergone a mid-life upgrade, wit a plan to have upgraded 85% of the total fleet over the next 8 years.
Staff:
Staff costs have been growing at an underlying rate of 3%-4% annually.
SMRT's main headcount increase will be in the region of 100 in preparation of the Circle Line stage 3 opening.
Land Transport review — positives and negatives
Key positive— sustained higher rail ridership growth
Population growth: The higher trend rail ridership, one of the main reasons for our earnings upgrade of SMRT, we believe is here to stay for the long term. The key underpinning of this is growth in the Singapore population, which we estimate could grow over 25% from the present 4.6m to about 5.8m in approximately 13 years (+1.8%CAGR). While no specific population targets have been officially announced by the government, we infer this figure from the forecast 327,200 island wide residential units to be added in the next 10-15 years under the URA 2008 Master Plan. At an average of 3.7 persons per household (per the year 2000 Census) this translates into a population addition of just over 1.2m. Extending this argument further, this could see the Singapore labour force growing from 2.75m to over 3.42m (assuming a participation rate of 59%).
Increasing use of public transport: An explicit goal of the review is to increase
use of public transport during peak hours. In 2007 the share of public transport usage during was 63%, and it is targeted that this is increased to 70% by 2020. Simple math dictates that on this basis, public transport ridership could grow at a faster pace than the total population/labour force figure of about 2.5% per annum. This growth is of course also supported by the planned increase in the rail network, beyond the opening of the Circle Line.
Doubling the length of the rail network:
It is possible that these estimates will prove too conservative. The government will expand the rail network by building 2 new rail lines - the Thomson Line and Eastern Region Line. The Thomson line will travel from MarinA bay northwards to Ang Mo Kio and onward to Woodlands via Sin Ming, Kebun Baru, Thomson and Kim Seng.
From Marina Bay, the Thomson line will connect with another new MRT line, the Eastern Region Line. (ER). The ER line will serve Tanjong Rhu, Marine Parade, Siglap, Bedok South and Upper East Coast, and connect to Changi in the east. These 2 new lines will expand the network by 48km.
In addition the government aims to extend the North-South and East-West Lines, The North-South Line will extend beyond Marina Bay station with a 1-km extension to serve the Marina Bay area and the new cruise terminal in Marina South. The East-West Line will be extended by another 14km into Tuas.
The new lines and extensions will double Singapore’s rail network from 138km to 278km by 2020. The rail network will be able to carry 3 times as many journeys, rising from today’s 1.4 million a day to 4.6 million in 2020.
Key concern—network contestability
Affects both bus and rail: While these long term estimates look wholly positive for the rail industry, there's a potential concern for SMRT itself. As part of the overall review of the public transport system, the Transport Minister announced that the government intends to introduce contestability in both the bus and the rail sector. The reasoning behind the introduction of contestability appears to be premised on the idea that the threat of competition must be real to the current incumbents. For rail, one step is to have shorter operating licenses of 10 to 15 years instead of the existing 30-year licence periods.
No details were mentioned but the LTA will likely consult the operators on their plan for introducing contestability. The introduction of contestability into the bus and rail industries announced is a sea change in transport policy. It is difficult to assess the financial impact to the operators without further details.
However it can no longer be assumed that SMRT will automatically secure future MRT concessions (although we believe that existing concessions should continue to be honoured). Similarly Comfort’s dominance of the bus industry (where service route contracts are in effect renewal on a annul basis) in Singapore will likely be eroded.
Quants view: Glamor
SMRT Corp lies in the glamour quadrant of our value-momentum map with weak relative valuation and strong momentum scores. With a strong composite momentum backed by positive earnings revisions and long-term price momentum, the stock has moved back to and is now comfortably placed in the glamour quadrant.
On the momentum front, SMRT ranks higher than its peers both in the Singapore market and the Transportation sector. However, on the valuation front, the stock lags behind its peers in the Singapore market as well as in the Transportation sector.
From a systematic macro exposure analysis, SMRT being a low beta stock would hold its own in falling markets.
MRT:
SMRT's first licence to operate the MRT System was granted by Singapore’s Land Transport Authority (LTA) in August 1987 for a period of 10 years and was later extended to 31 March 1998. The current licence to operate the MRT System for a further period of 30 years came into force on 1 April 1998. The licence fee payable is 1.0% of the gross annual fare revenue.
SMRT Trains currently operates the North South and East West lines covering a combined route length of 89.4 kilometres serving 51 stations. Fleet of 106 trains, each of which comprises six cars. Present ridership c.1.28m/day
LRT:
SMRT was been granted a LOA by LTA to operate the LRT System commencing 6 November 1999 till 31 March 2028. LTA currently owns all the operating assets and infrastructure required to operate the LRT System. Ridership c.41,400/day Circle Line (CCL): SMRT Trains has been awarded a contract by LTA to operate the Circle Line for an initial period of 10 years from the date of its opening and to extend for an additional 30 years, subject to good performance. SMRT will operate the Circle Line when it commences revenue service in 2010 (it is also likely that one stage ("Stage 3") of the Circle Line will open as early as mid-2009). The 33.3 kilometres Circle Line is an orbital circuit that links all existing MRT lines to the city centre and is expected to significantly trim travelling times.
Boon Lay Extension: expected to be completed in 2009. Prior to the opening of Circle Line, the Boon Lay Extension, currently under construction, will extend the East West line westwards from Boon Lay station to serve the communities around Jurong West and Joo Koon Circle.
BUS
FY08 turnover S$196m (24% of total)
Operating profit S$1.5m (<1% operating margin)
Public Bus:
SMRT Buses operates a fleet of 861 buses, comprising 550 12-metre buses, and 311 18-metre Bendy buses.
SMRT operate 48 trunk services, 14 feeder services, six intratown services, one express service and seven NightRider services.
Private Bus : Bus-Plus Pte Ltd, which operates private bus and bus chartering services, manages a fleet of 59 buses. Bus-Plus runs seven condominium services, peak hour and scheduled services, and charter services for special events.
Avg. daily ridership reached 757,700/day in FY2008 (+2.3%yoy)
TAXI
FY08 turnover S$75m (9% of total)
Operating profit S$0.6m (<1% operating margin)
Number2 player: Singapore’s taxi industry has been undergoing a transformation since it was liberalised. The deregulation of taxi fares in September 1998 allowed taxi companies to set their own fares. In June 2003, limits on the number of taxi companies and their fleet sizes were lifted resulting in intense competition in the industry. SMRT Taxis has grown from a fleet of 1,889 taxis prior to liberalization to 3,002 taxis as at end March 2008.
OTHERS
Advertising and rental turnover S$62m (8% of total)
Operating profit S$45.7m (74% operating margin, 26% of total profit)
Engineering turnover S$24m (3% of total)
Operating profit S$1.3m (6% operating margin)
Advertising & rental of retail space:
Despite being less than 8% of group revenues, advertising and retail space rental contributed a significant 26% to group operating profit in FY2008, due to rich operating margins of 66% and 74% respectively. These businesses saw robust growth in FY2008, largely due to renovation and a more active usage of MRT hall space and trains, and mgmt are guiding for further good growth in these operations in FY2009.
Company description
A 54.5%-owned subsidiary of Temasek Holdings, SMRT Corporation listed on the Singapore Exchange on 26 July 2000. SMRT is a multi-modal transport service provider operating a mass rapid train system along a network of 97.2km of rail in Singapore, a scheduled bus service in the North Western part of Singapore and a fleet of 3,000 taxis. The group has been awarded the new Circle Line, which is expected to be operational in 2010. Bus and train fares are regulated by the Public Transport Council. To raise non-fare revenues, SMRT has been growing advertising and retail rental business in its stations.
Investment strategy
We rate SMRT Hold/Low Risk, with a target price of S$1.88, as relatively rich valuations can be justified by the recent trend of higher rail ridership growth and improving margins and ROEs. This growth should continue, although over the next two years higher staff, energy and depreciation costs could provide a slight drag as SMRT prepares to open the Circle Line by FY10. The longer-term outlook for rail ridership appears to be positive given robust underlying population growth, government initiatives to increase usage of public transport and plans to double the rail network by 2020. However, greater competition could also be introduced in the industry.
Valuation
We use an earnings-based measure, P/E, as our primary valuation measure, as the share price has historically been driven by the near-term earnings prospects of the group. Our target price of S$1.88 is based on a DDM-implied FY09E P/E of 17.8x with EPS of S$0.106, a payout ratio of 79%, DPS of S$0,083 and growth of 5%; equating to 4x P/B vs. a projected ROAE or 23%.
While admittedly a rich multiple, we think it is justified by improved growth prospects for rail and the company's commitment to a high dividend payout (recently c.78%), reflecting its strong cashflow generation and relatively stable business model. This valuation implicitly assumes that present rail concessions will be renewed at the end of their current lives.
We rate SMRT as Low Risk according to our quantitative risk-rating system, which tracks the historical 260-day volatility of shares. Upside and downside risks to our price target include: [a] Rail (and bus) ridership growth, which has reached a higher trend in recent years; [b] The extent of (government regulated) fare revisions for public buses and rail; [c] the success or otherwise of the Circle Line operations from FY10; [d] sharp rise or decline in electricity and diesel prices, which is a key component of operating costs; [e] ability to improve the profitability or otherwise of taxi, bus and LRT operations, each of which is barely breakeven or small loss makers; and [f] the execution of longterm government plans as laid out in its Land Transport review.
Closing Price
1: 28 Jun 05 *3 - 1.14
2: 26 Jul 05 *4 - 1.20
3: 9 Aug 05 *3 - NA
4: 30 Aug 05 *4 - 1.03
5: 13 Sep 05 *5 - 1.06
6: 27 Sep 05 *6 - 1.04
7: 11 Oct 05 *7 - 1.04
8: 19 Oct 05 *8 - 1.03
9: 29 Nov 05 *6 - 1.07
10: 5 Jan 06 *8 - 1.08
11: 6 Feb 06 *7 - 1.13
12: 17 Feb 06 *6 - 1.13
13: 28 Feb 06 *7 - 1.10
14: 16 Mar 06 *8 - 1.12
15: 18 Apr 06 *9 - 1.13
16: 28 Jun 06 *4 - 1.08
17: 12 Jul 06 *6 - 1.15
18: 5 Aug 06 *3 - 1.09
19: 9 Aug 06 *6 - 1.08
20: 19 Aug 06 *7 - 1.08
21: 7 Sep 06 *8 - 1.09
22: 16 Sep 06 *3 - 1.10
23: 4 Oct 06 *5 - 1.10
24: 16 Oct 06 *3 - 1.11
25: 5 Dec 06 *4 - 1.13
26: 22 Jan 07 *5 - 1.37
27: 11 May 07 *8 - 1.94
28: 6 Jun 07 *9 - 1.92
29: 7 Jul 07 *6 - 1.97
30: 3 Aug 07 *3 - 1.80
31: 2 Oct 07 *8 - 1.76
32: 6 Nov 07 *4 - 1.76
33: 7 Feb 08 *6 - NA
34: 6 Mar 08 *7 - 1.78
35: 3 Apr 08 *6 - 1.82
36: 14 May 08 *8 - 1.81
37: 3 Jun 08 *7 - 1.73
Monday, June 23, 2008
心得片片录之一
股票投资，既不纯是科学，也不纯是艺术，乃是科学与艺术的混合体，也可以说是介乎科学与艺术之间。
若股票投资是科学的，那么企业盈利增加10仙，股价也上升10仙。但是，在股市中，盈利上升，股价可以跌10仙，也可以上20仙。
若股票投资是艺术的，则可以不必理会事实和数据，只凭想像，天马行空，投资就可以成功，如果你这样做的话，后果必然是饮恨海。
股票研究涵盖两个部份：
第一个部份：理论的探讨。从股票研究鼻祖本查明·格拉罕到现在，短短的几十年，有关投资理论的书，已汗牛充栋，即使白首穷经，也只能涉猎一小部份而已，故不喜欢读书的人，不可以研究股票，尤其是不可以研究理论。
第二个部份：上市公司研究，以时间为经，需研究个别公司的发展史，以业务为纬，需研究公司的结构、行业特征、财政演变、企管领导人的背景与作风、企业的经营理念等，错综复杂，绝不是以玩票性质视之，以业余的态度对待，可以登堂入室的。
上市公司的业务几乎涵盖了国家经济的所有领域，从贸易、工业、原产、服务、建筑、科技、金融到基本设施，无所不包，除非你对每个领域的特征经营方式以及其优劣点，有相当深入的了解，否则，对有关行业的资料，包括分析文章，宏观和微观的报导，实难以有深入的体验。
股票研究易学难精
故股票研究，易学难精。
股票投资非常个人化的，适合于甲的理论，未必适用于乙。
如果有一种理论，可以应用于所有人的话，那么，大家只要照搬巴菲特的投资理念去做，人人都可以成为巴菲特第二了。
事实是：研究巴菲特的书，少说也有一百几十种，然而世界上并没有出现第二个巴菲特。
如果你研究西方最成功投资家的历史的话，你会发现每一个人的作风都不同，投资手法各异，然而他们殊途同归，都有卓越的成就。
故成功投资人，可以借镜，但要投资成功，还是要发展自己的一套策略。
股票研究的进程，其实跟教育的进程，是一样的。
中小学是基础教育，无所不读，不管实用不实用都要读。以求其博。
不博则无以扩大视野，成为井底之蛙。
故不博则陋。
大学专攻一个领域，范围缩小了，如文科生不必读数学。
但还是属於较为深入的普通教育，旨在求其精。
不精则流於肤浅。
到了硕士、博士，才有资格说“通”，对某个科目，上下纵横皆如意，从心所欲，不逾矩，是为“通”。
不通则滞。
股票研究由博到精，由精到通，非长期浸淫，无以为功。
博、精、通，需循序渐进，不能速成。
融汇贯通，必须经过博和精的“融会”阶段，才会“贯通”，就是这个道理。
若股票投资是科学的，那么企业盈利增加10仙，股价也上升10仙。但是，在股市中，盈利上升，股价可以跌10仙，也可以上20仙。
若股票投资是艺术的，则可以不必理会事实和数据，只凭想像，天马行空，投资就可以成功，如果你这样做的话，后果必然是饮恨海。
股票研究涵盖两个部份：
第一个部份：理论的探讨。从股票研究鼻祖本查明·格拉罕到现在，短短的几十年，有关投资理论的书，已汗牛充栋，即使白首穷经，也只能涉猎一小部份而已，故不喜欢读书的人，不可以研究股票，尤其是不可以研究理论。
第二个部份：上市公司研究，以时间为经，需研究个别公司的发展史，以业务为纬，需研究公司的结构、行业特征、财政演变、企管领导人的背景与作风、企业的经营理念等，错综复杂，绝不是以玩票性质视之，以业余的态度对待，可以登堂入室的。
上市公司的业务几乎涵盖了国家经济的所有领域，从贸易、工业、原产、服务、建筑、科技、金融到基本设施，无所不包，除非你对每个领域的特征经营方式以及其优劣点，有相当深入的了解，否则，对有关行业的资料，包括分析文章，宏观和微观的报导，实难以有深入的体验。
股票研究易学难精
故股票研究，易学难精。
股票投资非常个人化的，适合于甲的理论，未必适用于乙。
如果有一种理论，可以应用于所有人的话，那么，大家只要照搬巴菲特的投资理念去做，人人都可以成为巴菲特第二了。
事实是：研究巴菲特的书，少说也有一百几十种，然而世界上并没有出现第二个巴菲特。
如果你研究西方最成功投资家的历史的话，你会发现每一个人的作风都不同，投资手法各异，然而他们殊途同归，都有卓越的成就。
故成功投资人，可以借镜，但要投资成功，还是要发展自己的一套策略。
股票研究的进程，其实跟教育的进程，是一样的。
中小学是基础教育，无所不读，不管实用不实用都要读。以求其博。
不博则无以扩大视野，成为井底之蛙。
故不博则陋。
大学专攻一个领域，范围缩小了，如文科生不必读数学。
但还是属於较为深入的普通教育，旨在求其精。
不精则流於肤浅。
到了硕士、博士，才有资格说“通”，对某个科目，上下纵横皆如意，从心所欲，不逾矩，是为“通”。
不通则滞。
股票研究由博到精，由精到通，非长期浸淫，无以为功。
博、精、通，需循序渐进，不能速成。
融汇贯通，必须经过博和精的“融会”阶段，才会“贯通”，就是这个道理。
RBS Predicts Global Market Crash: What's In It for Them?
According to the UK daily newspaper Telegraph, a research team from Royal Bank of Scotland (RBS) is warning investors to get ready for a “full fledged crash in global stocks and credit markets over the next three months," noting inflation will paralyze major central banks.
They forecast a 300-point drop in the S&P by September to around 1050, with contagion spreading across global stock markets, and for the iTRAXX index (high grade corporate bonds) to widen to 130/150, the “Crossover index” (low grade corporate bonds) to widen to 650/700 on renewed investor panic. Their reasoning is that the temporary momentum from America’s fiscal boost may fizzle out by July on delayed impact from the oil spike.
Bob Janjuah, credit strategist at RBS, said, “A very nasty period is soon to be upon us - be prepared.”
He said, “The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets.” He also said in order for global inflation to be lower, we may need to see slower global growth.
Maybe RBS is short on S&P, and they want investors to go short as well, while screaming “The sky is falling”? That’s right, it’s a bit insane for a financial institution to make such sensational doomsday remarks. However coming from the guy who was known for his warnings last year about the credit crisis which proved to be accurate, it might be worth listening to what he’s saying.
And if RBS is warning investors about this market crash, which would amount to one of the worst bear markets in the last 100 years, does it want normal retail stock investors to sell their portfolios and realize whatever losses they have sustained over the past year, thus pushing stocks even lower (if RBS is short, it would make sense!)? Given the volatile market conditions over the past few months, investors will have experienced a huge blow and cutting their losses now might be too little, too late.
Forex Trading
With no major economic releases or speeches on tap today, currencies have been moving sideways. The US dollar is up against the Euro, Swiss franc, British pound and Japanese yen. The British pound is a notable loser, falling for the second day against the dollar as minutes from the Bank of England June 5 policy meeting showed members decided an interest-rate hike wasn’t “urgently” needed to keep inflation under control. The minutes also revealed that David Blanchflower was the only policy member who wanted a rate change, voting for a cut to from 5% to 4.75%. Blanchflower might already have changed his mind about that after yesterday’s release of UK inflation data which showed inflation up 3.3%.
GBP/USD fell to a low of 1.9475 today, but traded above yesterday’s low. It has since moved back up above 1.9550. Shorting interest may crowd around 1.9600 and 1.9630. The pound is also weaker versus the Euro, trading near the lowest level in a week. If the BOE resists lifting interest rates higher to keep inflation expectations down, we could see more downside risks to the Pound.
Yesterday, BOE’s King wrote a letter to Chancellor of the Exchequer Alistair Darling, saying that the “path of bank rate that will be necessary to meet the 2 percent target is uncertain."
They forecast a 300-point drop in the S&P by September to around 1050, with contagion spreading across global stock markets, and for the iTRAXX index (high grade corporate bonds) to widen to 130/150, the “Crossover index” (low grade corporate bonds) to widen to 650/700 on renewed investor panic. Their reasoning is that the temporary momentum from America’s fiscal boost may fizzle out by July on delayed impact from the oil spike.
Bob Janjuah, credit strategist at RBS, said, “A very nasty period is soon to be upon us - be prepared.”
He said, “The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets.” He also said in order for global inflation to be lower, we may need to see slower global growth.
Maybe RBS is short on S&P, and they want investors to go short as well, while screaming “The sky is falling”? That’s right, it’s a bit insane for a financial institution to make such sensational doomsday remarks. However coming from the guy who was known for his warnings last year about the credit crisis which proved to be accurate, it might be worth listening to what he’s saying.
And if RBS is warning investors about this market crash, which would amount to one of the worst bear markets in the last 100 years, does it want normal retail stock investors to sell their portfolios and realize whatever losses they have sustained over the past year, thus pushing stocks even lower (if RBS is short, it would make sense!)? Given the volatile market conditions over the past few months, investors will have experienced a huge blow and cutting their losses now might be too little, too late.
Forex Trading
With no major economic releases or speeches on tap today, currencies have been moving sideways. The US dollar is up against the Euro, Swiss franc, British pound and Japanese yen. The British pound is a notable loser, falling for the second day against the dollar as minutes from the Bank of England June 5 policy meeting showed members decided an interest-rate hike wasn’t “urgently” needed to keep inflation under control. The minutes also revealed that David Blanchflower was the only policy member who wanted a rate change, voting for a cut to from 5% to 4.75%. Blanchflower might already have changed his mind about that after yesterday’s release of UK inflation data which showed inflation up 3.3%.
GBP/USD fell to a low of 1.9475 today, but traded above yesterday’s low. It has since moved back up above 1.9550. Shorting interest may crowd around 1.9600 and 1.9630. The pound is also weaker versus the Euro, trading near the lowest level in a week. If the BOE resists lifting interest rates higher to keep inflation expectations down, we could see more downside risks to the Pound.
Yesterday, BOE’s King wrote a letter to Chancellor of the Exchequer Alistair Darling, saying that the “path of bank rate that will be necessary to meet the 2 percent target is uncertain."
Sunday, June 22, 2008
永远不要买股票
一个只盯着股票的投资者，必定是一个失败的投资者。因为就股票本身而言，它仅仅是一堆毫无价值的废纸。真正有价值的东西是这些股票所代表的公司所有权。因此，成功投资者购买的不是股票，而是股票背后的公司。
这种区别在一些人看来似乎很微妙，或毫无疑义。但作为一个投资者，这个区别必须牢记于心。总的来说，公司股票真正的价值取决于公司的财务表现。对于市场上的股价来回波动，那只是一种噪音。如果你想成为一个顶级投资者，你需要学会不受这些噪音影响，或利用这些噪音。
购买便宜的公司
没错，你是可以从震荡的股市中获利，但必须掌握两种关键技能：
（1） 识破噪音，客观看待；
（2） 耐心等待噪音结束。
当你同时拥有了这两个技能，你就掌握了低买高卖的关键。投资成功与否，取决于你区分公司和股票之间不同表现的能力。你买入的价格比公司真正的价值越低，你赚的就越多。另一方面，你卖出时价格比公司真正价值越高，你赚得也越多。
这种对公司股价和公司价值的比较是价值型投资策略打败市场的关键，如同沃伦.巴菲特挑选出可口可乐公司一样。
合理的价格
这儿有个关键性的问题：到底为公司的价值支付多少才是一笔好买卖呢？这得看具体公司及它们的盈利能力而定。大体上来说，一个公司产生的现金越多，它的价值就越大。但你要考虑的不仅仅是现金的数量，你还要考虑产生这些现金的时间问题。也就是说，你是想今天就拿到100块呢？还是希望从现在起的10年内得到1000块呢？
为了兼顾这两个问题，价值型投资者们发明了DCF（Discounted Cash Flow，贴现现金流）来计算人们为了获得未来的现金流现在所愿付出的价钱。简而言之，DCF就是将未来现金流转换成现值。这实际上没有听起来的那么复杂，只要你愿意付出时间和精力。
不为浮躁所动
那么，既然这个方法如此简单，为什么并非每个人都能判定合理的买卖价格，成为成功投资者呢?这是因为，成功的投资者不仅仅要相信数据，还必须克服股市里的浮躁情绪。
价值型投资者善于把股市的非理性转化为自己投资的优势。回想90年代末期，网络风靡一时，而传统行业股票股却被认为是垃圾股。如果那时你能排除那些市场上的噪音，买进传统行业股票，比如：Simon Property Group、 Macerich，你就可以在短期内获得丰厚的收益。
同样回首2003年3月，当时麦当劳的价格仅是现在的三分之一。你想过你会在四年不到的时间里赚到三倍的钱吗？在一个“低成长”的快餐行业，一个所谓有效率的市场上，这简直不可思议。
放眼未来
当然，过去的已经过去，你不可能用现在的钱购买昨天的价值。这也是为什么你不需要关心现在价格已经涨起来的股票，而需要关注这只股票背后公司是如何做到这点的。想一想那些曾经表现不好的公司失误在哪里，公司管理层如何改变这些糟糕的状况，这样，我们就可以在将来类似的情况中找到投资机会，获得收益。下一个麦当劳随时会出现，就是那些不被大众喜欢和欣赏，但正在转型复苏的公司。
这种区别在一些人看来似乎很微妙，或毫无疑义。但作为一个投资者，这个区别必须牢记于心。总的来说，公司股票真正的价值取决于公司的财务表现。对于市场上的股价来回波动，那只是一种噪音。如果你想成为一个顶级投资者，你需要学会不受这些噪音影响，或利用这些噪音。
购买便宜的公司
没错，你是可以从震荡的股市中获利，但必须掌握两种关键技能：
（1） 识破噪音，客观看待；
（2） 耐心等待噪音结束。
当你同时拥有了这两个技能，你就掌握了低买高卖的关键。投资成功与否，取决于你区分公司和股票之间不同表现的能力。你买入的价格比公司真正的价值越低，你赚的就越多。另一方面，你卖出时价格比公司真正价值越高，你赚得也越多。
这种对公司股价和公司价值的比较是价值型投资策略打败市场的关键，如同沃伦.巴菲特挑选出可口可乐公司一样。
合理的价格
这儿有个关键性的问题：到底为公司的价值支付多少才是一笔好买卖呢？这得看具体公司及它们的盈利能力而定。大体上来说，一个公司产生的现金越多，它的价值就越大。但你要考虑的不仅仅是现金的数量，你还要考虑产生这些现金的时间问题。也就是说，你是想今天就拿到100块呢？还是希望从现在起的10年内得到1000块呢？
为了兼顾这两个问题，价值型投资者们发明了DCF（Discounted Cash Flow，贴现现金流）来计算人们为了获得未来的现金流现在所愿付出的价钱。简而言之，DCF就是将未来现金流转换成现值。这实际上没有听起来的那么复杂，只要你愿意付出时间和精力。
不为浮躁所动
那么，既然这个方法如此简单，为什么并非每个人都能判定合理的买卖价格，成为成功投资者呢?这是因为，成功的投资者不仅仅要相信数据，还必须克服股市里的浮躁情绪。
价值型投资者善于把股市的非理性转化为自己投资的优势。回想90年代末期，网络风靡一时，而传统行业股票股却被认为是垃圾股。如果那时你能排除那些市场上的噪音，买进传统行业股票，比如：Simon Property Group、 Macerich，你就可以在短期内获得丰厚的收益。
同样回首2003年3月，当时麦当劳的价格仅是现在的三分之一。你想过你会在四年不到的时间里赚到三倍的钱吗？在一个“低成长”的快餐行业，一个所谓有效率的市场上，这简直不可思议。
放眼未来
当然，过去的已经过去，你不可能用现在的钱购买昨天的价值。这也是为什么你不需要关心现在价格已经涨起来的股票，而需要关注这只股票背后公司是如何做到这点的。想一想那些曾经表现不好的公司失误在哪里，公司管理层如何改变这些糟糕的状况，这样，我们就可以在将来类似的情况中找到投资机会，获得收益。下一个麦当劳随时会出现，就是那些不被大众喜欢和欣赏，但正在转型复苏的公司。
成功投资者旅途指南
成为一名成功投资者并非一日之功。学习金融世界的法则、培养你个人的投资习惯，这都要花费你大量的时间和耐心，这其中还不包括你反复实验和练习的时间。在这篇文章中，投资百科网会带领你走过投资旅途需要首先经历的七大驿站，并且告诉你走在这条投资道路上需要关注哪些方面的事情。
1、准备启程
成功投资好比一场旅行，而且只售单程票，一旦你准备开始这场旅行，就必须做好事先准备。需要考虑一下，你的目的地是什么？需要花多长时间到达那里？需要哪些资源？这里你首先必须确定好你的目的地，然后以此制定这场投资旅行的计划。例如，你希望再过20年，在55岁的时候就退休吗？你希望在退休前能赚多少钱呢？这些都是必须先问问自己的问题，这样，投资计划才能与你的目标相匹配。
2、了解游戏规则
去阅读或者参加一些涉及当代金融理论的书籍或投资课程吧。要知道，这些总结出投资组合优化、多元化投资和有效市场理论的人才可都是诺贝尔奖得主。投资是科学（财务原理）和艺术（定性分析）的结合。科学，更是投资路上必经的出发地点，不可忽视。如果你面对科学和金融理论比较头大，也不必烦恼，市场上还有很多简明易懂的普及读本，例如《长期股票投资》（Stocks for the long run）（作者：Jeremy Siegel，1994年，国内尚无译本）一书中就用简单易懂的方式对高级金融理论进行了平民化解释。
一旦你知道了市场是如何运作的，你就可以得到一些简单的原则用来指导投资了。例如，沃伦"巴菲特曾说过“如果我不能理解它，我就不会在它身上投资”。这是巴菲特投资理念的一个总结，他很好的贯彻了这句话，虽然错过了科技股的上涨，但这也帮助他避免了2000年科技股的低迷。
3、了解自己
没有人能比你自己更了解你自己了。因此，你可能是最有资格为自己投资理财的人选，你需要的仅仅是一点帮助。确认一下自己身上有哪些个性品质是可以帮助你投资成功的，那就好好保持这些个性品质！
这里有一个非常有效的模型可以帮助投资者们了解他们投资行为。
这个模型根据两类个性特点――行为方式（谨慎/冲动）和自信程度（自信/焦虑）对投资者行为进行分类。根据这些个性特点，BB&K模型把投资者分成5类人：
个人主义：谨慎且自信，通常采用“DIY”方式投资；
冒险家：不稳定性、企业式的、强烈的意愿；
名人效应：紧随投资时尚步伐；
监护人：坚决反对冒险，财富守护者；
中规中矩：融合以上所有个性。
不要惊讶，最好的投资结果往往来自哪些个人主义者，或者是那些拥有分析能力、自信的、有眼光鉴别价值的人。但如果你觉得你的个性类似于冒险家，那也没有关系，如果你能调整你的投资战略，你仍然有机会获得成功。换句话说，不管你是属于上述中哪一类的投资群体，你必须用一个系统性的有原则的方法来管理你的核心资产。
4、了解你的朋友和敌人
你的朋友有可能是一本可靠的投资指导书、一家备受尊重的媒体，或者是一些拥有长期观点、正直的、有经验的专业投资人士。但是，你要警惕那些假装为你着想的无信义的“朋友”，例如那些没有道德的专业投资人士，他们的利益也许会和你的利益产生冲突。你还必须记住一点，那就是，作为个人投资者，你是在和大型金融机构做竞争，他们有更多的资源，可以更快更多的获得信息。
记住，你很可能就是自己潜在的最大敌人。你的个性、投资战略、以及周围特殊的环境都有可能会阻碍你的成功。如果你是“监护人”个性的投资者，会发现周围的朋友在近期股市行情大好的时候都大赚了一笔，如果你在这个时候加入他们的阵营就会有悖于你的个性。因为你是一个风险厌恶者，希望保全财富，如果那些高风险高回报的投资出现亏损，对你的负面影响会远远大于其它个性的投资者。
5、找到正确路线
你知识的水平高低、你的个性、你拥有的资源，都会影响你对投资道路的选择。通常来说，投资者们采用下面下列几种战略之一：
不要把你所有的鸡蛋放在一个篮子里面，也就是说，要分散投资；
把所有的鸡蛋都放在一个篮子里面，看好你的篮子；
结合上述两种战略，运用战术管理核心被动资产组合。
大多数成功投资者们开始的时候都选择低风险的分散投资组合，边做边学。因此，他们的投资知识随着时间累积而增加，变得比较适合更为灵活的投资组合。
6、遵守纪律
坚持长期投资战略也许并不是最令人兴奋的投资选择。但是，如果你坚持受不情绪化影响或者不依靠你“不可信的朋友”，成功的几率会大出很多。
7、保持学习的意愿
市场虽然难以预测，但有一点是可以肯定的，那就是，市场是不稳定的。学习成为一个成功投资者是一个循序渐进的过程，投资道路更是一个长期旅行。如果市场证明你错了，那么承认这个错误，并从中吸取教训。如果你成功了，恭喜，再接再厉！
总结
你投资的成功达到什么样的地步，是取决于你设定的目标。但是，坚持按照这七个步骤走，就可以帮助你走上一条正确的投资之路。祝你一路顺风！
1、准备启程
成功投资好比一场旅行，而且只售单程票，一旦你准备开始这场旅行，就必须做好事先准备。需要考虑一下，你的目的地是什么？需要花多长时间到达那里？需要哪些资源？这里你首先必须确定好你的目的地，然后以此制定这场投资旅行的计划。例如，你希望再过20年，在55岁的时候就退休吗？你希望在退休前能赚多少钱呢？这些都是必须先问问自己的问题，这样，投资计划才能与你的目标相匹配。
2、了解游戏规则
去阅读或者参加一些涉及当代金融理论的书籍或投资课程吧。要知道，这些总结出投资组合优化、多元化投资和有效市场理论的人才可都是诺贝尔奖得主。投资是科学（财务原理）和艺术（定性分析）的结合。科学，更是投资路上必经的出发地点，不可忽视。如果你面对科学和金融理论比较头大，也不必烦恼，市场上还有很多简明易懂的普及读本，例如《长期股票投资》（Stocks for the long run）（作者：Jeremy Siegel，1994年，国内尚无译本）一书中就用简单易懂的方式对高级金融理论进行了平民化解释。
一旦你知道了市场是如何运作的，你就可以得到一些简单的原则用来指导投资了。例如，沃伦"巴菲特曾说过“如果我不能理解它，我就不会在它身上投资”。这是巴菲特投资理念的一个总结，他很好的贯彻了这句话，虽然错过了科技股的上涨，但这也帮助他避免了2000年科技股的低迷。
3、了解自己
没有人能比你自己更了解你自己了。因此，你可能是最有资格为自己投资理财的人选，你需要的仅仅是一点帮助。确认一下自己身上有哪些个性品质是可以帮助你投资成功的，那就好好保持这些个性品质！
这里有一个非常有效的模型可以帮助投资者们了解他们投资行为。
这个模型根据两类个性特点――行为方式（谨慎/冲动）和自信程度（自信/焦虑）对投资者行为进行分类。根据这些个性特点，BB&K模型把投资者分成5类人：
个人主义：谨慎且自信，通常采用“DIY”方式投资；
冒险家：不稳定性、企业式的、强烈的意愿；
名人效应：紧随投资时尚步伐；
监护人：坚决反对冒险，财富守护者；
中规中矩：融合以上所有个性。
不要惊讶，最好的投资结果往往来自哪些个人主义者，或者是那些拥有分析能力、自信的、有眼光鉴别价值的人。但如果你觉得你的个性类似于冒险家，那也没有关系，如果你能调整你的投资战略，你仍然有机会获得成功。换句话说，不管你是属于上述中哪一类的投资群体，你必须用一个系统性的有原则的方法来管理你的核心资产。
4、了解你的朋友和敌人
你的朋友有可能是一本可靠的投资指导书、一家备受尊重的媒体，或者是一些拥有长期观点、正直的、有经验的专业投资人士。但是，你要警惕那些假装为你着想的无信义的“朋友”，例如那些没有道德的专业投资人士，他们的利益也许会和你的利益产生冲突。你还必须记住一点，那就是，作为个人投资者，你是在和大型金融机构做竞争，他们有更多的资源，可以更快更多的获得信息。
记住，你很可能就是自己潜在的最大敌人。你的个性、投资战略、以及周围特殊的环境都有可能会阻碍你的成功。如果你是“监护人”个性的投资者，会发现周围的朋友在近期股市行情大好的时候都大赚了一笔，如果你在这个时候加入他们的阵营就会有悖于你的个性。因为你是一个风险厌恶者，希望保全财富，如果那些高风险高回报的投资出现亏损，对你的负面影响会远远大于其它个性的投资者。
5、找到正确路线
你知识的水平高低、你的个性、你拥有的资源，都会影响你对投资道路的选择。通常来说，投资者们采用下面下列几种战略之一：
不要把你所有的鸡蛋放在一个篮子里面，也就是说，要分散投资；
把所有的鸡蛋都放在一个篮子里面，看好你的篮子；
结合上述两种战略，运用战术管理核心被动资产组合。
大多数成功投资者们开始的时候都选择低风险的分散投资组合，边做边学。因此，他们的投资知识随着时间累积而增加，变得比较适合更为灵活的投资组合。
6、遵守纪律
坚持长期投资战略也许并不是最令人兴奋的投资选择。但是，如果你坚持受不情绪化影响或者不依靠你“不可信的朋友”，成功的几率会大出很多。
7、保持学习的意愿
市场虽然难以预测，但有一点是可以肯定的，那就是，市场是不稳定的。学习成为一个成功投资者是一个循序渐进的过程，投资道路更是一个长期旅行。如果市场证明你错了，那么承认这个错误，并从中吸取教训。如果你成功了，恭喜，再接再厉！
总结
你投资的成功达到什么样的地步，是取决于你设定的目标。但是，坚持按照这七个步骤走，就可以帮助你走上一条正确的投资之路。祝你一路顺风！
为什么巴菲特会羡慕你
巴菲特一直被视为最为成功的投资者。不过为什么巴菲特希望他可投资的资金少一些呢？读了这篇文章之后你会发现同巴菲特相比，作为一名小投资者，或许更容易取得投资高回报。
价值投资的艺术
沃伦-巴菲特对价值投资的完善作出了很多贡献。他师从于公认的华尔街证券分析之父本杰明-格雷厄姆（在19世纪20年代就以其衡量公司内在价值的投资策略而闻名）。根据他的投资策略，只有在公司股价低于公司的内在价值时，他才会买入股票。同样，巴菲特选择的目标公司也需要满足这样一些基本条件：公司拥有出色管理、简单易懂的商业模式、较高的利润率、较低的负债水平。接下来，他才会进一步地去确定公司未来5-10年的预期成长率。如果公司的股价低于未来的预期水平，这个时候巴菲特才会把它纳入长期投资组合中。
在巴菲特的带领下，伯克希尔哈撒韦已经成长为拥有2000亿美元资产的伟大公司。根据2005年8月一篇文章中的统计，在1980至2003年的24年中，有20个年头，巴菲特的投资策略都成功地击败了标普500指数，平均年回报高于标普500指数12.24个百分点。这样的高回报并没有高风险，伯克希尔哈撒韦的投资组合中多数都是大型企业股票，例如强生公司、美国安豪泽布施公司、卡夫食品等。
成长性
复利在巴菲特的成功中扮演了重要的角色。在他选择的时候，一只股票盈利的复合年度增长率至少要达到10%的水平。在四十年前他刚开始的时候，有许多达到这样最低投资回报要求的股票可供他选择。虽然他那时候的资产管理规模不能和现在同日而语。
现在，巨大的资产规模和成功也为巴菲特带来了问题。他的新挑战是如何使庞大的资产依然保持过去的增长水平，而巴菲特却只能从那些市值规模巨大的公司中选择优质股票。现在可选的范围相对小了许多。
在2007年，巴菲特增持了1400万股美洲银行，增持幅度为59.1%，而这只仅仅占了他投资组合的0.74%；增持350万股Sanofi-Aventis，只相当于其投资组合的0.18%。
小投资，高回报
在1999年的一次股东大会上，沃伦-巴菲特坦言如果他只有一小笔资金，他可以取得50%的投资回报。对于1亿或者10亿美元的资金，他不可能取得这样高的投资回报。因为高速成长的小型公司才能取得最高的回报率，可惜这样的公司现在帮不上巴菲特的忙。举个简单的例子，如果巴菲特投资一家市值2亿4千万美元的公司并取得了100%的增长，对伯克希尔哈撒韦公司业绩增长只有0.3%的贡献，考虑到研究的投入，根本不值得伯克希尔哈撒韦这样做。尽管增长快速，如今的巴菲特也只能远离这些小公司股票，因为他不想引起小公司股价的不正常上涨，也不愿意去控制一家上市公司。
巴菲特并不是唯一一个因为成功而面临这种尴尬的人。许多优秀的共同基金和投资管理公司也经常因为类似的原因拒绝新的投资者，过大的资产规模会使得管理者们难以掌控，也难以实现投资者期望的收益水平。
总结
因此，对于一般的投资者而言，资金量少确实是一种投资的优势。而且现在发达的网路和资讯手段帮助中小投资者们可以更加方便的进行股票的买卖，更容易挑选优质的成长性上市公司，也有众多的中小企业可供选择。即使作为资金量少的投资者，依然可以进行投资分散组合。作好研究、坚持正确的投资原则、选择优质的股票并长期持有。如果你做到了，你的财富会实现复利式的快速增长，巴菲特也只有羡慕你的份儿
价值投资的艺术
沃伦-巴菲特对价值投资的完善作出了很多贡献。他师从于公认的华尔街证券分析之父本杰明-格雷厄姆（在19世纪20年代就以其衡量公司内在价值的投资策略而闻名）。根据他的投资策略，只有在公司股价低于公司的内在价值时，他才会买入股票。同样，巴菲特选择的目标公司也需要满足这样一些基本条件：公司拥有出色管理、简单易懂的商业模式、较高的利润率、较低的负债水平。接下来，他才会进一步地去确定公司未来5-10年的预期成长率。如果公司的股价低于未来的预期水平，这个时候巴菲特才会把它纳入长期投资组合中。
在巴菲特的带领下，伯克希尔哈撒韦已经成长为拥有2000亿美元资产的伟大公司。根据2005年8月一篇文章中的统计，在1980至2003年的24年中，有20个年头，巴菲特的投资策略都成功地击败了标普500指数，平均年回报高于标普500指数12.24个百分点。这样的高回报并没有高风险，伯克希尔哈撒韦的投资组合中多数都是大型企业股票，例如强生公司、美国安豪泽布施公司、卡夫食品等。
成长性
复利在巴菲特的成功中扮演了重要的角色。在他选择的时候，一只股票盈利的复合年度增长率至少要达到10%的水平。在四十年前他刚开始的时候，有许多达到这样最低投资回报要求的股票可供他选择。虽然他那时候的资产管理规模不能和现在同日而语。
现在，巨大的资产规模和成功也为巴菲特带来了问题。他的新挑战是如何使庞大的资产依然保持过去的增长水平，而巴菲特却只能从那些市值规模巨大的公司中选择优质股票。现在可选的范围相对小了许多。
在2007年，巴菲特增持了1400万股美洲银行，增持幅度为59.1%，而这只仅仅占了他投资组合的0.74%；增持350万股Sanofi-Aventis，只相当于其投资组合的0.18%。
小投资，高回报
在1999年的一次股东大会上，沃伦-巴菲特坦言如果他只有一小笔资金，他可以取得50%的投资回报。对于1亿或者10亿美元的资金，他不可能取得这样高的投资回报。因为高速成长的小型公司才能取得最高的回报率，可惜这样的公司现在帮不上巴菲特的忙。举个简单的例子，如果巴菲特投资一家市值2亿4千万美元的公司并取得了100%的增长，对伯克希尔哈撒韦公司业绩增长只有0.3%的贡献，考虑到研究的投入，根本不值得伯克希尔哈撒韦这样做。尽管增长快速，如今的巴菲特也只能远离这些小公司股票，因为他不想引起小公司股价的不正常上涨，也不愿意去控制一家上市公司。
巴菲特并不是唯一一个因为成功而面临这种尴尬的人。许多优秀的共同基金和投资管理公司也经常因为类似的原因拒绝新的投资者，过大的资产规模会使得管理者们难以掌控，也难以实现投资者期望的收益水平。
总结
因此，对于一般的投资者而言，资金量少确实是一种投资的优势。而且现在发达的网路和资讯手段帮助中小投资者们可以更加方便的进行股票的买卖，更容易挑选优质的成长性上市公司，也有众多的中小企业可供选择。即使作为资金量少的投资者，依然可以进行投资分散组合。作好研究、坚持正确的投资原则、选择优质的股票并长期持有。如果你做到了，你的财富会实现复利式的快速增长，巴菲特也只有羡慕你的份儿
Saturday, June 21, 2008
巴菲特式投資六招:做自己力所能及的事
巴菲特式投資的六要素，巴菲特的神秘之處恰在於他簡單有效的投資方式。
有"股神"之稱的沃倫·巴菲特看起來是個慈祥長者，他似乎更喜歡家鄉奧馬哈的農場，而不是曼哈頓市中心的董事會會議室。這種樸素作風也體現在他的投資方式上。用他自己的話說，就是管好自己的事，做自己"力所能及"的事。
在20世紀90年代末，巴菲特成功地躲過了網路科技泡沫的破裂，只因為他覺得"我不懂這些"。同時，他卻敢於大手筆投資可口可樂公司。
巴菲特的投資方式究竟有什麼要素？文章列舉了6點供投資者參考：
1.賺錢而不要賠錢
這是巴菲特經常被引用的一句話："投資的第一條準則是不要賠錢；第二條準則是永遠不要忘記第一條。"因為如果投資一美元，賠了50美分，手上只剩一半的錢，除非有百分之百的收益，才能回到起點。
巴菲特最大的成就莫過於在1965年到2006年間，歷經3個熊市，而他的伯克希爾·哈撒韋公司只有一年(2001年)出現虧損。
2.別被收益矇騙
巴菲特更喜歡用股本收益率來衡量企業的盈利狀況。股本收益率是用公司凈收入除以股東的股本，它衡量的是公司利潤佔股東資本的百分比，能夠更有效地反映公司的盈利增長狀況。
根據他的價值投資原則，公司的股本收益率應該不低於15%。在巴菲特持有的上市公司股票中，可口可樂的股本收益率超過30%，美國運通公司達到37%。
3.要看未來
人們把巴菲特稱為"奧馬哈的先知"，因為他總是有意識地去辨別公司是否有好的發展前途，能不能在今後25年裏繼續保持成功。巴菲特常說，要透過窗戶向前看，不能看後視鏡。
預測公司未來發展的一個辦法，是計算公司未來的預期現金收入在今天值多少錢。這是巴菲特評估公司內在價值的辦法。然後他會尋找那些嚴重偏離這一價值、低價出售的公司。
4.堅持投資
能 對競爭者構成巨大"屏障"的公司預測未來必定會有風險，因此巴菲特偏愛那些能對競爭者構成巨大"經濟屏障"的公司。這不一定意味著他所投資的公司一定獨佔 某種產品或某個市場。例如，可口可樂公司從來就不缺競爭對手。但巴菲特總是尋找那些具有長期競爭優勢、使他對公司價值的預測更安全的公司。
20世紀90年代末，巴菲特不願投資科技股的一個原因就是：他看不出哪個公司具有足夠的長期競爭優勢。
5.要賭就賭大的
絕 大多數價值投資者天性保守。但巴菲特不是。他投資股市的620億美元集中在45隻股票上。他的投資戰略甚至比這個數字更激進。在他的投資組合中，前10隻 股票佔了投資總量的90%。晨星公司的高級股票分析師賈斯廷·富勒說："這符合巴菲特的投資理念。不要猶豫不定，為什麼不把錢投資到你最看好的投資對象上 呢？"
6.要有耐心等待如果你在股市裏換手，那麼可能錯失良機。
巴菲特的原則是：不要頻頻換手，直到有好的投資對象才出手。巴菲特常引用傳奇棒球擊球手特德·威廉斯的話："要做一個好的擊球手，你必須有好球可打。"如果沒有好的投資對象，那麼他寧可持有現金。據晨星公司統計，現金在伯克希爾·哈撒韋公司的投資配比中佔18%以上，而大多數基金公司只有4%的現金。
有"股神"之稱的沃倫·巴菲特看起來是個慈祥長者，他似乎更喜歡家鄉奧馬哈的農場，而不是曼哈頓市中心的董事會會議室。這種樸素作風也體現在他的投資方式上。用他自己的話說，就是管好自己的事，做自己"力所能及"的事。
在20世紀90年代末，巴菲特成功地躲過了網路科技泡沫的破裂，只因為他覺得"我不懂這些"。同時，他卻敢於大手筆投資可口可樂公司。
巴菲特的投資方式究竟有什麼要素？文章列舉了6點供投資者參考：
1.賺錢而不要賠錢
這是巴菲特經常被引用的一句話："投資的第一條準則是不要賠錢；第二條準則是永遠不要忘記第一條。"因為如果投資一美元，賠了50美分，手上只剩一半的錢，除非有百分之百的收益，才能回到起點。
巴菲特最大的成就莫過於在1965年到2006年間，歷經3個熊市，而他的伯克希爾·哈撒韋公司只有一年(2001年)出現虧損。
2.別被收益矇騙
巴菲特更喜歡用股本收益率來衡量企業的盈利狀況。股本收益率是用公司凈收入除以股東的股本，它衡量的是公司利潤佔股東資本的百分比，能夠更有效地反映公司的盈利增長狀況。
根據他的價值投資原則，公司的股本收益率應該不低於15%。在巴菲特持有的上市公司股票中，可口可樂的股本收益率超過30%，美國運通公司達到37%。
3.要看未來
人們把巴菲特稱為"奧馬哈的先知"，因為他總是有意識地去辨別公司是否有好的發展前途，能不能在今後25年裏繼續保持成功。巴菲特常說，要透過窗戶向前看，不能看後視鏡。
預測公司未來發展的一個辦法，是計算公司未來的預期現金收入在今天值多少錢。這是巴菲特評估公司內在價值的辦法。然後他會尋找那些嚴重偏離這一價值、低價出售的公司。
4.堅持投資
能 對競爭者構成巨大"屏障"的公司預測未來必定會有風險，因此巴菲特偏愛那些能對競爭者構成巨大"經濟屏障"的公司。這不一定意味著他所投資的公司一定獨佔 某種產品或某個市場。例如，可口可樂公司從來就不缺競爭對手。但巴菲特總是尋找那些具有長期競爭優勢、使他對公司價值的預測更安全的公司。
20世紀90年代末，巴菲特不願投資科技股的一個原因就是：他看不出哪個公司具有足夠的長期競爭優勢。
5.要賭就賭大的
絕 大多數價值投資者天性保守。但巴菲特不是。他投資股市的620億美元集中在45隻股票上。他的投資戰略甚至比這個數字更激進。在他的投資組合中，前10隻 股票佔了投資總量的90%。晨星公司的高級股票分析師賈斯廷·富勒說："這符合巴菲特的投資理念。不要猶豫不定，為什麼不把錢投資到你最看好的投資對象上 呢？"
6.要有耐心等待如果你在股市裏換手，那麼可能錯失良機。
巴菲特的原則是：不要頻頻換手，直到有好的投資對象才出手。巴菲特常引用傳奇棒球擊球手特德·威廉斯的話："要做一個好的擊球手，你必須有好球可打。"如果沒有好的投資對象，那麼他寧可持有現金。據晨星公司統計，現金在伯克希爾·哈撒韋公司的投資配比中佔18%以上，而大多數基金公司只有4%的現金。
中行更勝工行
工商銀行（1398）董事長姜建清上星期表示，希望在未來五年內，令工行變成全球最賺錢銀行。若以市值計算，工行刻下已是全世界最大銀行，因此不算誇口狂言。
去年工行盈利達八百一十五億元人民幣，今年首季亦公布賺三百三十億元人民幣。若以此大膽推算，全年料賺一千三百億元人民幣。即使最終只能賺到一千一百億元人民幣，也肯定讓工行躋身全球頂尖銀行之列。何況我僅以一美元兌六點九五元人民幣推算，而人民幣未來還有很大升值潛力。
人民幣升值推高盈利
未來四年，工行每年的增長約一成半至兩成，或許有人認為這增長太慢。假設匯豐較以往的增長為差，未來每年僅有一成增長；到二○一三年，最少可賺二千二百億港元，折合約二百八十億美元。若工行每年增長達兩成，以今年盈利是一千一百億元人民幣為基礎，二○一三年料可賺二千三百億元人民幣；以今天的兌率計算，折合賺三百三十億美元。因此姜建清才深信工行能超越匯豐等老牌對手。
這還要假定美國不少銀行，在這幾年忙於解決刻下次按的問題，就似香港當年處理負資產一樣，故無力令盈利遞升；強如花旗集團，估計今年只能賺二百五十億美元。除此之外，亦要假設沒有大型銀行合併，否則工行亦難如願以償成為全球一哥。
工行現價五元八角，○八年預測市盈率約十五倍半，實屬吸引。工行無疑不俗，但回望其他中資銀行股，就以組合擁有的中行為例，它便比工行更為便宜。
中行去年盈利約五百六十億元人民幣，今年首季公布賺二百一十五億元人民幣，全年推算可賺七百二十億元人民幣，折合約八百一十億港元。中行現時市值約一萬億港元，市盈率低於十二倍半，確實吸引得很。
中行資產淨值更高
根據工行首季的公布，每股資產淨值是人民幣一元六角九仙。而比工行更為官僚的中行，每股資產淨值是人民幣一元七角一仙。兩者甚相近，但工行現股價五元八角，相反中行只是三元九角。
今年七至八月，中資銀行股便會公布第二季度的業績，屆時便可看清楚市場是否低估了這行業。
而美國的銀行業，相信會較預期更快復甦，就像美國銀行（BankofAmerica）睇準花旗集團因資本不足，才提出收購對方。若成事的話，這新組成的超級巨無霸，勢必打沉工行的如意算盤。惟這僅會推遲中資銀行坐大的速度，理由是中國有十三億人口，相反美國本土僅有三億人口；不少美資大型銀行，早已因此衝出去向國際發展。
無論工行能否成為全球最賺錢的銀行，但肯定中資銀行的前景較美資銀行更為亮麗，甚至比匯豐更佳。因為歐美的低增長及高稅制度，會令匯豐的發展蹣跚而行。
去年工行盈利達八百一十五億元人民幣，今年首季亦公布賺三百三十億元人民幣。若以此大膽推算，全年料賺一千三百億元人民幣。即使最終只能賺到一千一百億元人民幣，也肯定讓工行躋身全球頂尖銀行之列。何況我僅以一美元兌六點九五元人民幣推算，而人民幣未來還有很大升值潛力。
人民幣升值推高盈利
未來四年，工行每年的增長約一成半至兩成，或許有人認為這增長太慢。假設匯豐較以往的增長為差，未來每年僅有一成增長；到二○一三年，最少可賺二千二百億港元，折合約二百八十億美元。若工行每年增長達兩成，以今年盈利是一千一百億元人民幣為基礎，二○一三年料可賺二千三百億元人民幣；以今天的兌率計算，折合賺三百三十億美元。因此姜建清才深信工行能超越匯豐等老牌對手。
這還要假定美國不少銀行，在這幾年忙於解決刻下次按的問題，就似香港當年處理負資產一樣，故無力令盈利遞升；強如花旗集團，估計今年只能賺二百五十億美元。除此之外，亦要假設沒有大型銀行合併，否則工行亦難如願以償成為全球一哥。
工行現價五元八角，○八年預測市盈率約十五倍半，實屬吸引。工行無疑不俗，但回望其他中資銀行股，就以組合擁有的中行為例，它便比工行更為便宜。
中行去年盈利約五百六十億元人民幣，今年首季公布賺二百一十五億元人民幣，全年推算可賺七百二十億元人民幣，折合約八百一十億港元。中行現時市值約一萬億港元，市盈率低於十二倍半，確實吸引得很。
中行資產淨值更高
根據工行首季的公布，每股資產淨值是人民幣一元六角九仙。而比工行更為官僚的中行，每股資產淨值是人民幣一元七角一仙。兩者甚相近，但工行現股價五元八角，相反中行只是三元九角。
今年七至八月，中資銀行股便會公布第二季度的業績，屆時便可看清楚市場是否低估了這行業。
而美國的銀行業，相信會較預期更快復甦，就像美國銀行（BankofAmerica）睇準花旗集團因資本不足，才提出收購對方。若成事的話，這新組成的超級巨無霸，勢必打沉工行的如意算盤。惟這僅會推遲中資銀行坐大的速度，理由是中國有十三億人口，相反美國本土僅有三億人口；不少美資大型銀行，早已因此衝出去向國際發展。
無論工行能否成為全球最賺錢的銀行，但肯定中資銀行的前景較美資銀行更為亮麗，甚至比匯豐更佳。因為歐美的低增長及高稅制度，會令匯豐的發展蹣跚而行。
Friday, June 20, 2008
恐 慌 期 大 跌 毋 須 問 理 由
前 日 ， 港 股 突 然 反 彈 ， 我 沒 寫 任 何 評 語 。 昨 日 ， 港 股 又 打 回 原 形 ， 同 樣 的 ， 我 也 覺 得 不 值 得 評 論 。 過 去 兩 天 股 市 的 波 動 ， 你 會 猜 得 到 嗎 ？ 任 何 評 語 也 只 是 很 牽 強 的 ， 為 造 理 由 而 提 出 理 由 。
昨 日 早 上 ， 我 看 電 視 報 告 美 股 急 跌 ， 新 聞 附 上 一 段 解 釋 ， 說 有 幾 個 經 濟 數 據 不 理 想 ， 投 資 者 擔 心 美 國 經 濟 轉 差 ， 因 此 股 價 大 跌 。 實 際 上 ， 如 果 前 晚 美 股 是 上 升 ， 我 相 信 分 析 員 的 分 析 會 是 ： 經 濟 數 據 差 ， 投 資 者 對 加 息 的 憂 慮 減 低 ， 因 此 股 價 大 升 。
股 市 的 任 何 事 後 分 析 ， 實 際 上 很 多 都 是 如 上 述 ， 為 了 找 個 理 由 而 找 個 理 由 來 解 釋 股 價 的 升 跌 。 實 際 上 ， 美 國 經 濟 數 據 差 ， 股 市 可 以 升 也 可 以 跌 ， 理 由 如 上 述 。 如 果 美 國 經 濟 數 據 好 ， 股 市 也 一 樣 可 以 升 可 以 跌 。 如 果 股 市 升 ， 分 析 員 會 說 ， 經 濟 數 據 好 ， 投 資 者 不 擔 心 經 濟 衰 退 ， 所 以 股 市 上 升 。 如 果 股 市 跌 ， 分 析 員 的 答 案 是 ： 因 為 經 濟 數 據 好 ， 投 資 者 擔 心 會 加 息 ， 所 以 股 市 大 跌 。
這 就 是 為 甚 麼 我 覺 得 沒 有 必 要 為 過 去 兩 天 股 市 的 升 跌 強 行 提 出 甚 麼 理 由 來 解 釋 。
內 地 股 市 就 的 確 進 入 恐 慌 期 ， 一 浪 低 於 一 浪 的 跌 ， 很 多 人 無 法 明 白 ， 為 甚 麼 這 麼 多 好 股 的 股 價 會 跌 ？ 道 理 是 信 心 ， 當 許 多 人 認 為 股 價 還 會 往 下 跌 ， 則 不 論 是 好 的 股 、 不 好 的 股 ， 一 樣 會 下 跌 。
京 奧 漸 近 概 念 股 續 跌
在 牛 市 時 ， 股 民 可 以 接 受 較 高 的 PE ， 相 反 的 ， 在 熊 市 時 ， 股 民 就 會 走 向 另 一 個 極 端 ， 只 願 意 接 受 超 低 的 PE 。 當 上 證 綜 合 指 數 由 1900 點 往 上 升 至 3000 點 時 ， 許 多 人 已 經 說 是 漲 得 太 快 了 ， PE 太 高 了 ， 因 此 ， 目 前 上 證 綜 合 指 數 跌 破 3000 點 ， 也 就 不 值 得 大 驚 小 怪 。
過 去 ， 指 在 大 熊 市 時 下 跌 60% 是 很 平 常 的 事 。 中 國 股 市 不 成 熟 ， 跌 幅 更 是 沒 有 任 何 歷 史 資 料 可 供 參 考 。 我 自 己 也 曾 經 在 不 久 前 買 入 A50 中 國 基 金 ， 後 來 升 了 一 陣 ， 現 在 倒 虧 了 。
2006 年 ， 錦 江 酒 店 上 市 ， 從 上 市 那 一 天 開 始 ， 這 隻 股 就 被 定 性 為 奧 運 概 念 股 ， 現 在 奧 運 開 幕 日 子 越 來 越 近 ， 這 隻 股 的 股 價 卻 一 跌 再 跌 ， 我 手 上 也 有 一 些 ， 真 倒 楣 。
昨 日 早 上 ， 我 看 電 視 報 告 美 股 急 跌 ， 新 聞 附 上 一 段 解 釋 ， 說 有 幾 個 經 濟 數 據 不 理 想 ， 投 資 者 擔 心 美 國 經 濟 轉 差 ， 因 此 股 價 大 跌 。 實 際 上 ， 如 果 前 晚 美 股 是 上 升 ， 我 相 信 分 析 員 的 分 析 會 是 ： 經 濟 數 據 差 ， 投 資 者 對 加 息 的 憂 慮 減 低 ， 因 此 股 價 大 升 。
股 市 的 任 何 事 後 分 析 ， 實 際 上 很 多 都 是 如 上 述 ， 為 了 找 個 理 由 而 找 個 理 由 來 解 釋 股 價 的 升 跌 。 實 際 上 ， 美 國 經 濟 數 據 差 ， 股 市 可 以 升 也 可 以 跌 ， 理 由 如 上 述 。 如 果 美 國 經 濟 數 據 好 ， 股 市 也 一 樣 可 以 升 可 以 跌 。 如 果 股 市 升 ， 分 析 員 會 說 ， 經 濟 數 據 好 ， 投 資 者 不 擔 心 經 濟 衰 退 ， 所 以 股 市 上 升 。 如 果 股 市 跌 ， 分 析 員 的 答 案 是 ： 因 為 經 濟 數 據 好 ， 投 資 者 擔 心 會 加 息 ， 所 以 股 市 大 跌 。
這 就 是 為 甚 麼 我 覺 得 沒 有 必 要 為 過 去 兩 天 股 市 的 升 跌 強 行 提 出 甚 麼 理 由 來 解 釋 。
內 地 股 市 就 的 確 進 入 恐 慌 期 ， 一 浪 低 於 一 浪 的 跌 ， 很 多 人 無 法 明 白 ， 為 甚 麼 這 麼 多 好 股 的 股 價 會 跌 ？ 道 理 是 信 心 ， 當 許 多 人 認 為 股 價 還 會 往 下 跌 ， 則 不 論 是 好 的 股 、 不 好 的 股 ， 一 樣 會 下 跌 。
京 奧 漸 近 概 念 股 續 跌
在 牛 市 時 ， 股 民 可 以 接 受 較 高 的 PE ， 相 反 的 ， 在 熊 市 時 ， 股 民 就 會 走 向 另 一 個 極 端 ， 只 願 意 接 受 超 低 的 PE 。 當 上 證 綜 合 指 數 由 1900 點 往 上 升 至 3000 點 時 ， 許 多 人 已 經 說 是 漲 得 太 快 了 ， PE 太 高 了 ， 因 此 ， 目 前 上 證 綜 合 指 數 跌 破 3000 點 ， 也 就 不 值 得 大 驚 小 怪 。
過 去 ， 指 在 大 熊 市 時 下 跌 60% 是 很 平 常 的 事 。 中 國 股 市 不 成 熟 ， 跌 幅 更 是 沒 有 任 何 歷 史 資 料 可 供 參 考 。 我 自 己 也 曾 經 在 不 久 前 買 入 A50 中 國 基 金 ， 後 來 升 了 一 陣 ， 現 在 倒 虧 了 。
2006 年 ， 錦 江 酒 店 上 市 ， 從 上 市 那 一 天 開 始 ， 這 隻 股 就 被 定 性 為 奧 運 概 念 股 ， 現 在 奧 運 開 幕 日 子 越 來 越 近 ， 這 隻 股 的 股 價 卻 一 跌 再 跌 ， 我 手 上 也 有 一 些 ， 真 倒 楣 。
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