NextInsight - Latest News (Main) Wed, 20 Jun 2018 11:25:58 GMT FeedCreator 1.8.0-dev ( NO SIGNBOARD: Introduces Little Sheep hot pot franchise, buys remaining 20% of beer biz No Signboard Holdings, best-known for its chain of seafood restaurants in Singapore, has entered into a franchise agreement to develop and operate Little Sheep restaurant concept in Singapore.

Little Sheep is a well-known hot pot restaurant in China. 

littlesheepEstablished since 1999 with origins from Inner Mongolia, Little Sheep has over 280 outlets across China and markets including the USA, Canada and Japan. Of these, 270 are franchised. Photo: Company
Under the agreement, No Signboard will operate the franchise for 10 years, starting from 18 June 2018.

Stock price 

15.4 c

52-week range

15  – 33 c

PE (ttm)


Market cap

S$71 m

Shares outstanding

462 m

yield (ttm)




Source: Bloomberg

No Signboard targets to launch one restaurant per year in Singapore within the first five years.

Mr Sam Lim, Executive Chairman and CEO of No Signboard, said, "Little Sheep is known for its delicious soup base that is made from 36 spices and Mongolian lamb delicacies.

"Singapore remains a key, proven and familiar market for our Group with the right demographics to expand our restaurant business portfolio. Given the popularity of hot pot restaurants among Singaporean consumers over the last couple of years, we are confident that this venture would be a great success.”

With 30 years of track record in the F&B industry, No Signboard, in April 2017, diversified its business by starting The Ma2 (Mama) Shop.

This is a cluster of vending machines that sells ready-to-eat meals and medical supplies in seven locations including Tampines and Holland Drive.

draftdenmarkEstablished since 2014, Draft Demark is distributed across around 300 outlets in Singapore comprising mainly pubs, coffee shops and clubs. Meanwhile, No Signboard's fully-owned subsidiary – Tao Brewery -- has entered into a Sales and Purchase Agreement with Mr Samuel Chen Shangming to acquire the remaining 20% stake in Danish Breweries for S$400,000.

Mr Chen is an executive under the Group’s Beer Business.

The Acquisition, to be funded by the Group’s IPO proceeds (S$23.9 million gross), will be spread out across 10 monthly instalments of S$40,000.

Danish Breweries owns its signature Draft Denmark brand as well as manufactures and distributes Draft Denmark lagers in Singapore. 

SamLim"There are about 1,200 coffee shops in Singapore, definitely more than the number of pubs and clubs establishments in Singapore. Therefore, we have also taken the strategic view to focus on increasing our market share and presence in distributing our Draft Denmark beers to more coffeeshops. Our Group remains committed and cautiously optimistic of turning around our Beer Business in the coming quarters.”

-- Sam Lim (photo), 
Executive Chairman & CEO, 
No Signboard Holdings

Draft Denmark sells approximately 80,000 barrels, or 2.4 million litres, of lager annually in Singapore.

Prior to No Signboard’s IPO listing on the Catalist board of SGX in Nov 2017, the Group acquired 80% of Danish Breweries in June 2017 for S$1.78 million.

The initial acquisition boosted No Signboard’s revenue by around S$3.1 million for FY2017 in a span of 4 months and contributed about 14.5% of its FY2017 revenue.

Revenue from its beer business grew 23.1% from S$1.3 million in 1Q2018 to S$1.6 million in 2Q2018. The Group has set aside S$10.0 million of the IPO proceeds to expand the beer business.

Mr Sam Lim, Executive Chairman and CEO of No Signboard, said the acquisition of the remaining 20% stake was to "fully capitalise on the potential of the beer business."

The company is seeking to reduce the operational costs of the beer business, especially the marketing and distribution expenses, and expects it to boost earnings.

]]> (The NextInsight Team) Tue, 19 Jun 2018 00:23:18 GMT
REIT Management Fees: 4 Things You Need To Know

chuttersnap 530721 unsplashPhoto: Unsplash

There are close to 46 real estate investment trusts (REITs), property-related stapled securities and trusts listed in Singapore. Many of them offer investors here a chance to own a diversified pool of properties in renowned property markets such as Singapore, Australia, Indonesia, Hong Kong, China, Japan, Germany and the US.

Of course, there are also Singapore-listed REITs that enable us to gain exposure to niche property markets including New Zealand, Vietnam, the Philippines, the Maldives, Denmark, the Netherlands, Italy, Belgium and Spain.

In Singapore, there are five main types of REITs – commercial (office) REITs, retail REITs, industrial REITs, Hospitality REITs and healthcare REITs. Investors here also have the option of investing in three REIT exchange-traded funds (ETFs), which offer a low-cost and in-built diversification option.

REITs – An Easier Way To Become A Property Investor

LQM D71B36REIT managers have the scale to minimise the cost of maintaining the properties, marketing empty spaces, collecting rents and many other shared operational functions.

REIT managers are also able to optimise interest payments via bank loans and bond issues.

REITs are one of the most popular types of investment for many in Singapore. Since the first REIT was listed in Singapore in 2002 – CapitaLand Mall Trust – its prominence has soared among investors.

The main reason REITs have been so successful is because it brings together two very important elements that investors in Singapore seek 1) property investments and 2) regular and lucrative distributions.

If we were to invest in properties on our own, we’d be bogged down with many time-consuming financial and logistical tasks. These likely include sourcing for a good property to invest in, negotiating the price, financing the investment (often with a hefty down payment), marketing the property to find a tenant, negotiating the rent and managing the property. Furthermore, we’d have to constantly look for tenants every few years and ensure we stay in line with regulations.

This process gets more tedious if we were to own multiple properties, and exponentially more complicated if we owned properties in multiple countries.

REITs solve this problem by presenting a significantly simpler proposition for retail investors to own multiple properties in multiple countries. It has a dedicated team of experienced real estate managers with relevant expertise as well as keen insights into individual property markets and property types.

Besides this, a good REIT manager will also be able to maximize rental returns on properties. They do this by ensuring an optimal and diverse mix of tenants, utilizing common spaces better, enhancing assets to increase net lettable area and ensuring the properties do not lose relevance in the market.

In tandem, REIT managers have the scale to minimize the cost of maintaining the properties, marketing empty spaces, collecting rents and many other shared operational functions. REIT managers are also able to optimize interest payments via bank loans and bond issues.

While these are things individual property investors cannot do on their own, REIT managers charge a pretty penny for their services. Often, retail investors may not even be aware of the management fees we are actually paying. And, even if we are aware, many of us are likely to ignore it, prioritizing the distribution yield we end up receiving instead.

In this article, we look at four important things you need to know about REIT management fees.

# 1 Management Of REITs Don’t Come Cheap

REITs managers typically charge a handsome sum for their services. For many REIT managers, they charge a base fee (usually between 0.25% to 0.5% of the property value), a performance fee (usually based on its income or profits), as well as an acquisition fee (of usually 1% of acquisition) and divestment fee (0.5% of divestment).

In 2015, Straits Times covered a story highlighting the fees that REIT managers were paid. This was quite a wide range from 3.4% of revenue for Ascendas Hospitality Trust to 24.7% of revenue for Keppel REIT. Taking out the outliers, the majority of other REIT managers collected a management fee of between 6% and 9% of the REIT’s revenue.

To highlight an example, the REIT manager of the largest REIT in Singapore, CapitaLand Mall Trust, is a wholly-owned subsidiary of CapitaLand Limited. In FY2017, CapitaLand Mall Trust paid out close to $45.1 million in management fees (not including divestment fees in units). This was close to 6.6% of its total revenue in the year.

We should also note that management fees do not include property management fees. Property management fees for CapitaLand Mall Trust came up to $26.0 million in FY2017. Including this, close to 10.4% of the REITs revenue is paid out in management-related fees.

# 2 They Receive Payment In Units

LQM D71B36REIT managers usually receive part of their fees in units of the REIT. With more units in issue, the properties in our REIT investments have to earn a higher income just to pay out the same distributions as the year before.

If shareholders expect increasing distributions, the properties in the REITs would have to deliver a significantly better performance.

Another thing we should note is that REIT managers usually receive part of their fees in units of the REIT. This has two main implications.

Firstly, shareholders are slowly being diluted every year. With more units in issue, the properties in our REIT investments have to earn a higher income just to pay out the same distributions as the year before.

If shareholders expect increasing distributions, the properties in the REITs would have to deliver a significantly better performance.

Again, to highlight an example, Soilbuild Business Space REIT issued close to 9.9 million new units to its management in FY2017. This works out to be close to 1% of its units in issue at the start of the year or $6.0 million.

# 3 Artificially Boosting Of Distributions

The second implication deserves a whole point of its own.

Some REIT managers may choose to take a more substantial chunk of the management fees in units. This not only dilutes existing shareholders at a much faster pace but allows the REIT to distribute an artificially inflated yield to shareholders.

This is possible as less cash is paid out in management fees, in lieu of units, and more cash can go towards paying out better distributions.

# 4 Incentivised To Make Transactions

As mentioned earlier, REIT managers charge an acquisition and divestment fee component. This incentivizes them to make transactions in order to maximize their management fees.

LQM D71B36In many cases, REIT managers are associated companies of their sponsors. This may create pressure for the REITs to absorb their properties which may, or may not, be the best decision for the REIT, and perhaps even at inflated prices.

Those who are more cynical can interpret this as a chance for REIT managers to push for acquisitions and asset recycling (divestment of assets after a few years), even if it does not amount to an optimal financial decision for the REIT.

In many cases, REIT managers are associated companies of their sponsors. This may create pressure for the REITs to absorb their properties which may, or may not, be the best decision for the REIT, and perhaps even at inflated prices.

Also, REIT managers are paid a base fee which is usually based on the total property value as well as performance fee usually based on income. This may incentivize REIT managers to grow the REIT, regardless of whether it is purchasing sub-optimal properties or ramping up leverage to do so.

REIT Management Is Big Business

As you can see, investors pay a sizeable sum for the expertise of the REIT managers. If we believe that is a good business, we can consider investing in some of the listed REIT managers. If you look at the REITs listed here, you’ll see that many of them carry the name of a renowned listed property developer.

Some of the more common ones include Frasers Property, CapitaLand, Keppel, and OUE. Several are also managed by a listed entity, including SPH, Soilbuild and City Developments. Several REITs listed here are also managed by overseas-listed companies, including US-listed Manulife (Manulife US REIT), Indonesia-listed Lippo Karawaci (First REIT and Lippo Malls Indonesia Trust), Australia-listed Cromwell Property (Cromwell European REIT) and others.

Unfortunately for investors, ARA Asset Management, which was one of the largest REIT managers in Asia ex-Japan, was privatized in 2017. However, we could still get a smaller exposure to ARA Asset Management through Straits Trading Company, which owns close to 21% of the now private real estate management firm.

REITs And REIT Managers Have Done A Good Job
While there may be disadvantages to having REIT managers, we can’t deny that REITs have done very well since they were first listed in Singapore. Most continue to put in solid performances and attract growth opportunities. Much of this has to be attributed to good management of the REITs.

However, this does not mean we should turn a blind eye to its management and management fee structures. We need to continue being vigilant in monitoring our investments for changes being made in terms of fee structure, as well as acquisitions and divestments.

When the going gets tough, the strength of REITs will be defined by their management’s ability and structure.

This article is republished with permission from Dollars and Sense.

]]> (Dinesh Dayani) Fri, 15 Jun 2018 22:30:28 GMT
DIM SUM PORTFOLIO: Ain't so great after 1 year Well, our dim sum portfolio, comprising a diverse range of stock picks, hasn't proven to be sizzling thus far.

After nearly a year of existence, the portfolio has returned a 1.7% loss compared to a 3.9% gain by the ST Index.

The 16 stock ideas came from 11 investors, hence it's a dim sum meal made up of various risk profiles, various return potential, etc. 

But all are supposed to be "tasty" for some reason or other, and a few hold the promise of sizzling returns.

Here's how the stocks did and, boy, were there a number of big disappointments:


Buy price

Dividend (since July 2017)

15 June 2018
share price ($)

Total % gain

Alliance Mineral Assets













Del Monte









GSS Energy




HL Global*










IPS Securex





Mandarin Oriental














Singapura Finance*













United Global







*Singapura Finance was sold in Sept 2017
HL Global is now sold

The top gainers were:

Tawana Resources (+60.4%) -- an ASX-listed lithium miner whose Bald Hill project has become the first Australian mine to produce lithium concentrate since 2016.

Tawana and its JV partner, Singapore-listed Alliance Mineral Assets, are headed for a merger in Sept 2018 with a pro-forma market cap of around S$450 million. 

mine6.18Tawana and Alliance Mineral Assets are 50-50 JV partners at the Bald Hill lithium & tantalum mine, Western Australia.
Photo: Shaun Clark/LinkedIn

♦ Nordic Group (+37%) -- a service provider to several oil majors in Singapore. Nordic has won investors over with its consistent 20% earnings growth in recent years.

The big disappointments were Del Monte (-43%) and SunMoon (-47%). Both, coincidentally, are in the fresh fruit business.

Of course, whatever the gains and losses, they are not permanent. What loss-making stocks might yet prove to be winners?

Background: The starting batch of stock ideas in the Dim Sum portfolio was reported in . 

For simplicity, the portfolio's return was based on each stock's 15 June 2018 price and original entry price, and dividends received, if any. 


And each stock had equal weightage in the portfolio. 

The Dim Sum portfolio succeeded the Nasi Lemak portfolio, which had an impressive trajectory over two years that led to a 143% gain. 

]]> (Leong Chan Teik) Wed, 20 Jun 2018 01:27:06 GMT
EC WORLD REIT: "Sponsor's asset ripe for injection into REIT," says analyst Excerpts from SooChow CSSD Capital Markets report

Analyst: Tan Cheng Wee, CAIA


Unit price: 
72 c

88 c

♦ Wuhan Meiluote acquisition completed, Sponsor’s ROFR asset imminent: Maiden acquisition Wuhan Meiluote (RMB145m, anchored by e-commerce tenants Jing Dong and Dang Dang) was completed on 28 Feb 18.

ECworld mgt3.18(L-R): CEO Goh Toh Sim | CFO Johnnie Tng | Head Investment, Asset Management and Investor Relations Jinbo Li. NextInsight file photo.We reiterate our view that Sponsor ROFR asset, phase 3 of the Fu Zhou e-commerce properties is ripe for injection after commencing operations, which could increase ECW’s underlying asset GFA by 34%.

♦ YCH Group (YCH) partnership a visible acquisition roadmap: The sponsor is jointly exploring with YCH to invest in logistics assets across China and South East Asia.

i) Near term, YCH will bring a portfolio of 13 logistics assets c.$400m and spanning 280,000sqm GFA for potential acquisition with YCH lessee and operator

ii) Longer horizon, ECW and YCH is expected to launch a US$150m logistics PERE fund in 2H18.

♦ Maintain BUY: ECW may enjoy yield compression as investors gradually digest the potential steepening of the inorganic growth trajectory and rising exposure to logistics e-commerce sector.

Maintain BUY rating and a TP of S$0.88/unit. ECW REIT offers attractive FY18E yield of 8.3% and currently trading at undemanding 0.8x P/B.

See also: 

]]> (Leong Chan Teik) Thu, 14 Jun 2018 03:50:38 GMT
SUNPOWER: 95-c target as it transforms into cashflow-rich utilities company In its report on Sunpower, Lim & Tan Research forecasts RMB250 million in net profit for FY18, which is similar to UOB Kayhian's (RMB247 million). Both use the Sum-of-Parts methodology to derive the target prices. But Lim & Tan Research has it as 95 cents while UOB KH, 77 cents. See:

Excerpts from Lim & Tan Research report


Share price: 
50 c

95 c

We are initiating coverage on Sunpower Group with a BUY recommendation with a target price of S$0.95, representing an upside of 90% from current share price.

♦ The Green Investments business (GI) is Sunpower’s primary value creator and growth driver. Enormous business opportunities are available in this segment in anti-smog services in China as
(i) small pollutive boilers run by individual factories are being mandatorily closed by the government and they have to switch to centralized clean steam boilers, while
(ii) factories are increasingly relocated to industrial parks, driving high growth rates for the expansion of these parks.


Dec YE












Net Profit (RMB'm)









P/E (x)



P/B (x)



ROE (%)



DPS (S$)

0.12 c

0.12 c

Dividend Yield (%)



Source: Lim & Tan Research

♦ GI is expected to transform Sunpower into a cashflow-rich utilities company.

It is the de facto monopolistic supplier of steam to factories within industrial parks through concession agreements that make it the exclusive supplier for 30 years, with the first right to renew these concessions after 30 years.

We understand that steam is a must-have product and its monopolistic model allows it to demand advance payment of tariffs.

♦ Sunpower is building up a valuable portfolio of GI assets that can generate high net present value of future cashflows and attractive double-digit IRR. With its first-mover edge, we opine that it is well-positioned to build up a scarce portfolio of valuable high-cashflow assets that, upon maturity, can be sold for a substantial premium to yield-hungry buyers such as insurance, infrastructure or state-owned funds.

GuoHongxin cu 2.2016Guo Hong Xin, executive chairman of Sunpower Group. NextInsight file photo.♦ We value Sunpower at S$0.95 as our base-case scenario target using a SOTP approach, according a P/E of 10x for its traditional M&S business (S$0.18/share) and a S$0.77/share value for the GI business.

We have assumed a conservative multiple-of-money (MoM) of 2x for its GI assets, relative to our estimate of ~3x MoM that is potentially achievable.

♦ On the back of revenue growth of 50% in FY18F, we are also expecting margins to improve and net profit to appreciate by 72% from FY17.

Currently trading at just FY18F 7.1x P/E and 1.4x P/B, we note that Sunpower's valuations are lower as compared to the average of its S-chip peers at 10.0x forward P/E and 2.7x P/B (see Exhibit 14).

However, we emphasize that we do not think that these companies are the best comparables because the returns on water sector projects are only in the single digits, as compared to Sunpower's 12-15%.

Full report here

]]> (Leong Chan Teik) Wed, 13 Jun 2018 17:40:52 GMT
ISOTEAM: Highest order book ever! Excerpts from CGS-CIMB report

Analyst: Ngoh Yi Sin

Singapore’s natural ally
AnthonyKoh8.15ISOTeam CEO Anthony Koh.
NextInsight file photo
Backed by a 20-year track record, ISOTeam is one of Singapore’s most experienced facilities management specialists.

With the Housing Development Board (HDB) expecting over 139k homes to benefit from the home improvement programme (HIP) according to press reports, management sees opportunities for further contract wins given its leading market share in repairs & redecoration (R&R; c.20%) and addition & alteration (A&A; c.30%) of the public landscape, in terms of overall revenue.

Stock price 


52-week range

32.5 - 38c

Market cap

S$101 m

PE (ttm)


Shares outstanding

 285.1 m



Dividend yield


Source: SGX StockFacts

Highest order book to-date
After including the S$52.6m order wins announced on 24 May 2018, ISOTeam’s order book increases 62% to S$133m, of which 47% stems from public projects (vs. over 80% historically) and reflects its diversification into the private sector.

The order book is also at its highest over the past three years (average: S$91.5m, see Figure 5). While 9M18 PATMI (-23.5% yoy) suffered from project delays and price competition, management expects a stronger 4QFY18 from larger, higher-margin projects.

NgohYisin3.16Offers c.2% yield and recurring business
Based on Bloomberg consensus, the stock currently trades at 10x 12M forward P/E. It also offers c.2% dividend yield. According to management, ISOTeam operates on a business model that is relatively resilient to economic cycles but dependent on foreign labour and subcontractors.

-- Ngoh Yi Sin (photo), 
analyst, CGS-CIMB

One-off gains to boost FY18F net profit, according to management
The group announced a 34.1% stake sale of its mechanical & electrical (M&E) arm to Japan’s Taisei Oncho (1904 JP, Not rated) in Feb 2018.

Apart from recognising c.S$1m divestment gains, management believes ISOTeam will also be able to leverage their M&E expertise and network for the next phase of growth.

Management estimates a S$2m-3m gain and rental cost savings in 4QFY18F from the completed sale and relocation of corporate headquarters in Mar 2018.

Going green, going regional
ISOTeam’s pursuit of complementary capabilities has helped mitigate the slower R&R project roll-out in recent years, according to management.

It has added solutions for landscaping, odour removal and waterproofing, to tap customers’ preference shifts and national push towards a greener and more ecofriendly environment.

The group also made headway in its overseas ventures, having completed and secured painting and cleaning contracts in Myanmar and Malaysia since 2016.

Full report here

]]> (Leong Chan Teik) Tue, 12 Jun 2018 03:07:24 GMT

Share Prices

Counter NameLastChange
AEM Holdings1.0800.020
Alliance Mineral0.3600.005
Avi-Tech Electronics0.3950.005
Best World Int.1.2400.010
China Sunsine1.550-0.060
DISA Limited0.009-
Dutech Holdings0.290-
Federal Int. (2000)0.2700.020
Food Empire0.655-0.015
Geo Energy0.220-
Golden Energy0.355-
GSS Energy0.1400.002
Heeton Holdings0.560-
KSH Holdings0.6200.015
Lian Beng Group0.5600.010
Nordic Group0.500-
Oxley Holdings0.420-
REX International0.0460.002
Serial System0.152-
Sing Holdings0.4300.005
Sino Grandness0.2250.015
Straco Corp.0.7550.005
Sunningdale Tech1.2900.030
Sunpower Group0.6100.010
The Trendlines0.1180.004
Tiong Seng0.390-
Trek 2000 Int.0.130-
Uni-Asia Group1.3500.010
XMH Holdings0.200-
Yangzijiang Shipbldg0.9400.020

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