SGNews

$Best World(CGN.SI) Direct-seller Best World International has announced a 36.4% rise in earnings of $12.2 million for the three months ended Sept, up from $8.9 million a year ago on lower expenses.

Revenue for 3Q17 came in 10.3% lower at $46.8 million compared to $52.2 million in the previous year, due to lower contribution from Taiwan and on the back of sustained export growth to China.

Segment-wise, revenue from Direct Selling declined 37% from that of the same quarter last year, primarily due to the decline in revenue from the group’s key market of Taiwan – while revenue for Export Segment in 3Q17 increased to 54% of the group’s total revenue as compared to 35.8% for the same period last year.

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opy avatar
Rank sm
528
opy

One year since I started my investing journey again ;-p

- Fun Fund (-25%, fortunately just a small sum)
- Itchy Hands Fund (-4.5%, need cure for this urgently)
- Lifelong Investing Fund (+15%, mainly SRS at the moment)
- Reserves (making 1-3% yearly interest in banks, SSB)

Realized Fun-fund is really fun but no fund... I use SCB to trade penny stocks, in and out too often without any plan. Buy at peak, sell at bottom. People buy before news and sell after, I do the opposite. $Rowsley^(A50.SI) $Delong(BQO.SI) $Falcon Energy(5FL.SI) just few from top of my list.

Itchy hands got me into similar but bigger troubles (as these are bigger sum trades). Managed to exit with small gain on $M1(B2F.SI) $ComfortDelGro(C52.SI) but now got trapped by $Best World(CGN.SI) $Hi-P(H17.SI) Not feeling good as I think these stocks will take many many years to get back to this level (or never) if the long anticipated crash finally arrives.

Lifelong Investing Fund mainly from the SRS bucket. I feel I am doing fine here. Other than taking profit far too early $DBS(D05.SI) $OCBC Bank(O39.SI) $UOB(U11.SI) $Venture(V03.SI) $Keppel Corp(BN4.SI) to name a few. All exited with 25% or higher gain. Most would have been 50-75% gain by now. Venture went more than doubled. But well, 15% gain overall is not too bad for me for now. For this bucket, I feel totally at ease even if the mega adjustment came. As it is sitting at average 5.67% dividend yearly. Mostly in stocks which I feel will still be here at least for another 10-15 years. Mostly REITs but heavy on $SingTel(Z74.SI) and lately into $UMS(558.SI) too.

I am still heavy on reserves as I don't want to repeat same mistake back in 2007/8/9. All fund trapped at peak and no more fund to have fun picking cherries. I shall be happy with the 1-3% return while continue to wait for the price like DBS $15, OCBC $8, UOB $18, Venture $9, Keppel Corp $5 and so on. Lower better. Buy and keep for 20 years.

The wait continues, meantime it is learn and learn whenever time allows.

Cheers.

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vincentwong10

$Delong(BQO.SI) Disclaimer: Since I'm not your financial advisor, don't believe everything I write. do your own research and take your own risk.

HISTORY

Warren Buffett once said that he knew what company he could potentially buy at the first 5 mins of reading the 10-K.
Looking at the balance sheet back then. I actually got the same feeling. And now the balance sheet is even stronger.
here are some valuation metrics:

Cash per share = SGD8
*cash and cash equivalents+
Bank balances pledged+
Held for Trading investment(cash placed with financial institutions for 3%interest rate per annum)

Net Assets per share = SGD8.2

It kinda looked like 2 years ago when I bought $Best World(CGN.SI) at SGD0.30 before share split, it was a debt-free company growing at 300% earnings with cash per share of SGD0.15. However, Delong has debt and it is a S-chip(worse that it is a steel company).
Since It is so undervalued I decided to look at its history and management which are fantastic. A young entrepreneur started with nothing, buy and turned a near bankrupt steel producer into biggest tax payer in its province in less than a year before he built it a China 500 company. Efficiency in operation is excellent. is more environmental friendly than all of its competitors.(so good that government actually rated the steel factory an AAA tourist attraction's certification.)
It invested heavily on technology enhancement during the past decade and now couple with historical high steel price it is at pivotal point of the company. It is deleveraging its balance sheet very rapidly and Delong is reaping the award for the years of hard work on green initiatives while his competitors are trying to catch up.

Result show China is very serious about steel capacity cut. there are trillions of debts in the industry. and government know they have to implement a strict supply side reform in order to
1)slowly deleverage
2)cut pollution
3)ease international pressure(from steel dumping accusations)

Risk comes from not knowing what you are doing.
Therefore I decided to study more about steel industry. I chose to read Big Steel: Technology, Trade, and Survival in a Global Market.
read a dozens of World Steel Association and Mckinsey &co's articles to get a better understanding of the metal world. I think the price of steel will be much stable than past. so I actually bought it.

PRESENT

Financial metrics are good!
Gross margin = 23.97% prior = 15%
supported by steel price and operation improvement

one thing to note that this quarter earning is actually boosted by one off gain of government compensation for shutting down Aoyu.
it is good but in order to make it a earning guidance in the future. I decided to "remove" it. so

Pretax Earning before one off gain = 624909000cny
(pretax)Operating margin = 20.88% prior = 10%

meaningless to take 4Q2016 to calculate trailing PE. Because there's Impairment charge of 600000000cny by closing down Aoyu. for those familiar with accounting, we can safely omit it since it no longer has any impact on balance sheet. and quarter 4Q2016 earning without the impairment charges = 198137000cny

FUTURE

They are demanded to cut production by half in winter season. So

Assuming sales is cut by half(624909000/2)

and steel and price drop to near historical low with hot rolled coil around 2800 and cold rolled coil around 3300 like 3Q2016. Assuming operating efficiency drop somehow plus finance cost increase for some reason. (pretax operating margin of 3Q2016- 10%)

183351450cny will be my extreme conservative estimate earning for 4Q2017.

Extreme conservative estimate for full year 2017:

profit before tax = CNY1840362450
Earning per share = SGD3.5
PE ratio= 1.13

one of Delong substantial shareholders is in the process of carrying out a strategic review of its shares in the Company, which may or may not lead to a transaction which might be similar to Evraz's move in 2008 (SGD19.7 per share)

the company is reducing its debt rapidly. when it reached a certain low leverage point. It will likely to give dividend if not acquire more capacity, or diversify its business for long term benefit of shareholders.

the result today is great but I won't know how the price is doing on on Monday. it really might drop. However,
Price is what you paid, value is what you get.
I know my share of value is surging and that is what matters the most in long run.

The stock market is a device for transferring money from the impatient to the patient.
Warren Buffett

Happy Investing

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duckie avatar
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351
duckie

9th Nov, we see a selldown of $Sunningdale Tech(BHQ.SI) and $Best World(CGN.SI)
Sunningdale have increase in revenue but decrease in net profit whereas Best World have increase net profit but decrease in revenue. Which is more important to you?

A) Revenue
B) Net profit

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