GohTeeLengThis article by Goh Tee Leng (left) was recently posted on ValueEdge and is republished with permission


LOOKING BACK at my past investments, I realise that for companies to realise their full potential, it usually takes 4 to 5 years. In today’s article, I will write about my investment thesis at the point of investing in 3 companies and where I went wrong.


400singpost» Singapore Post:

This was the very first stock I bought and it was solely based on my wanting a stable stock which would pay dividends year after year.

Subsequently, given how the slow-mail business was dying, SingPost's earnings started to decline, resulting in a fall in the share price to a low SGD0.80. While the company still consistently paid dividends, I decided that with a spike in price, it was my cue to exit this stock.

I remembered reading many reviews that there was too much optimism in the market especially for a business that was dying.

Looking at it now, who would have anticipated that Singapore Post would do a joint venture with Alibaba, reviving what most thought was a ‘dying’ business. Looking at all the past DCF models analysts created, there was no way anyone could have expected this move.

» Comfort Delgro Corporation:

busesSBS Transit is expected to divest S$1.2 billion of assets in 2016 to the government. NextInsight file photoI felt that with the company controlling more than 50% of the fleet of taxis in Singapore and trading at much lower multiples than SMRT, it was definitely a good stock.


Furthermore, Comfort Delgro offered overseas exposure, something that SMRT was unable to. When the share price hit a low SGD2.00, I ran through my numbers again. Although, based on a fair FCF yield, I estimated the fair price to be approximately SGD2.50, I reasoned that I was expecting too much from the company and it seems to have plateaued.

Looking at it now, who would have anticipated the Government’s move to overhaul the bus industry by restructuring it to a ‘government contracting model’ to encourage greater competition and to ease operators’ capital expenses.

Previously, Comfort Delgro’s 75%-owned SBS Transit had reported losses in its bus business due to the high cost of operations.



100_gardenia_bread_hifibre» QAF Ltd: 

With QAF, it was one of my first forays using a Graham-method of buying stocks below NAV.

With a NAV of approximately SGD1.00, I felt that at SGD0.70, the stock offered a sufficient margin of safety.

Furthermore, with its simple business of selling bread – Gardenia & Sunshine -- I felt it was definitely a classic Graham stock to buy. However, what led me to sell the stock was probably behavioural bias as I saw the company suffering a few quarters of negative FCF. Looking at it now, the company has hit my initial target price of SGD1.00.

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Counter NameLastChange
AEM Holdings2.760-0.050
Avi-Tech Electronics0.265-
Best World1.8000.010
Broadway Ind0.086-0.001
China Sunsine0.390-
ComfortDelGro1.390-0.010
Delfi Limited1.0500.010
Food Empire1.4200.020
Fortress Minerals0.2700.020
Geo Energy Res0.390-0.005
GSS Energy0.027-0.002
Hong Leong Finance2.560-
Hongkong Land (USD)3.270-0.060
InnoTek0.4350.005
ISDN Holdings0.340-0.005
ISOTeam0.035-
IX Biopharma0.041-0.005
Jiutian Chemical0.025-
KSH Holdings0.2500.005
Leader Env0.050-0.003
Medtecs Intl0.135-0.004
Nordic Group0.345-0.005
Oxley Holdings0.093-
REX International0.121-0.003
Riverstone0.745-
Sinostar PEC0.137-0.002
Southern Alliance Mining0.605-
Straco Corp.0.515-0.010
Sunpower Group0.215-
The Trendlines0.085-
Totm Technologies0.024-0.002
Uni-Asia Group0.840-0.010
Wilmar Intl3.390-0.020
Yangzijiang Shipbldg1.660-0.030
 

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