ISOTeam trades near 4 year low despite record order books and bright outlook (10 Jan 19) (Guest Post)

ISOTeam trades near 4 year low despite record order books and bright outlook (10 Jan 19) (Guest Post)

ISOTeam (“ISO”) caught my attention. Despite sitting on a record order book, ISO has tumbled approximately 44% from an intra-day high of $0.385 on 10 Apr 2018 to close near a four year low at around $0.215 on 10 Jan 2019. The share price decline was attributable in part to its 4QFY18 surprise loss announced in Aug 2018 (financial year ends in Jun). Nevertheless, my gut feel is that 4QFY18 should mark the trough in earnings and results should improve on a quarter on quarter basis in the next few quarters.

Image result for isoteam

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as el15, with more than 200+ followers.

As this company is a potential turnaround play, I have arranged a 1-1 meeting with Mr Anthony Koh, Executive Director and Chief Executive Officer and Mr Richard Chan, General Manager (collectively, “Management”) last month. First, a description of ISO…

Description of ISO

ISO has grown from a company doing repairs and redecoration (“R&R”) & addition and alteration (“A&A”) projects in 2014 (when I first met them) to a multi-disciplinary company which provides complete solutions to the built environment. See Figure 1 below for its business segments.

Fig 1: ISO complete solutions provider

Source: Company

Key takeaways from the meet-up

1.4QFY18 loss was due to several factors, some of which are unlikely to be repeated

ISO reported a 4QFY18 net loss of S$2.0m in Aug 2018. Overall, FY18 net profit dropped 71% from S$6.4m in FY17 to S$1.9m in FY18. This drop was mainly attributable to the following factors, some of which are likely to be one off:

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Don’t make the same mistake that I made 2 decades ago (Guest Post)

Don’t make the same mistake that I made 2 decades ago (Guest Post)

For the calendar year 2018, the Straits Times Index (STI) retreated from 3400.91 at the close of Year 2017 to 3068.76 at the close of Year 2018. The absolute fall for the calendar year 2018 was more than 10%. It had defied the predictions of many analysts.

Many of them were generally bullish at the beginning of Year 2018. By today, on the 1st day of trading for Year 2019, it retreated another nearly 30 points, -29.87 (to be exact). Surely, many players have been slowly but surely cashed out of the market as the market retreated. Even those with cash to spare were not willing to get into the market. Just as we know in economics, there were more sellers than buyers for year 2018. That, precisely, was the reason for the market to fall.

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as BrennenPak, with more than 3,000+ followers.

d

With each market fall, it flushes out some players. The unfortunate thing is market retreats and advances are never linear with time. They are never exactly predictable, especially over a longer of period of 6 months and longer. Market volatilities are due to the changing political, economic and social conditions that are thrown out into the market from time to time. Frankly who is able to predict what an influential political figure will say or act next week or next month or next year. Most of the rise and falls were due to some smart Alex out there trying to anticipate the moves of these people before things really happen. Unfortunately, time and again, it almost always sucks in new players and throw out some others as the market rise and falls in a falling trend. Many players, who were unable to take the market gyrations would have cashed out of the market, and stayed in cash in hope to fight for another day.

Let me say this. Market gyrations are not an easy thing to stomach, especially for those who are very watchful of the market movements. In fact, many are willing to take losses and leave the market instead of riding through the market ups and downs as sentiments get hazy. Along with the falling market, I am quite sure a number of us have this floating thought “I would rather take a small return of even 1-2% to protect my capital than to see my capital dwindling with time.” That precisely became the guiding principle that drives their action. So, instead of staying liquid after cashing out, they choose to put the money into more certain investments. They gladly put their money in longer term plans, such as fixed deposits and Singapore government bonds and even insurance plans that can only yield rewards (if there really are any), at least, 1, 2 years or even a few years down the road. I mention this because I happened to see some posts in social media lately. Some people seemed to have decided to take this course of action. Frankly, this was exactly the mistake that I made 20 years ago.

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New Feature: Forex, Personal Finance, MY, US and HK market channels

New Feature: Forex, Personal Finance, MY, US and HK market channels

New Feature: Forex, Personal Finance, MY, US and HK market channels

new-marketsWe’ve just released new channels! This includes Forex, Personal Finance, Malaysian, American and Hong Kong stock market channels.

You spoke and we listened. Many of our community members have requested for FX and foreign market data, so here we are. This brings us closer to our goal of being The One social platform to rule them all.

Special thanks to everyone who’ve given us the support, kind understanding and patience in our cause.

What’s the difference?

1) Each channel will help categorize, segment and archive content more appropriately
2) Will help everyone to look for relevant content more effectively
3) We now have intraday-delayed FX, MY, US and HK stock market data. Major FX pairs can now be searched under our search bar.
4) More things under one InvestingNote platform

How you can help as our community member:

1) When sharing a post, please select the relevant category (equity, forex, personal finance) of your content. This will help others to find your work in a more efficient, categorised manner.

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2) You will be able to select more than one category. But please keep it to the relevant context of your posting.

3) For MY, US and HK markets, you will only need to tag the stocks from those markets and it will automatically appear in the respective channels.

We hope this update will be useful. Thanks everyone!

**Please note that this is currently only for website. We will update our apps soon.

Become a part of our community and also see what other investors are saying about the current market right now: (click on the view now button)

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CityDevelopment (CDL) – Is There Value In This Company At $8.08? (Guest Post)

CityDevelopment (CDL) – Is There Value In This Company At $8.08? (Guest Post)

The revised cooling measures implemented in the middle of 2018 has finally pushed Q418 sales to a dip since Q217. It was only slightly down by 0.1% quarter on quarter and most of the decline was mainly due to landed sales so in all essence the demand for private property is still pretty buoyant.

With the introduction of the new cooling measures, which coincides along with the increase in tandem in interest rates, it brings the share price of City Development (CDL) down from the 52 week high of $13.6 to the last closing price of $8.08. (Jan 4th 2019)

Image result for city development limited

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as 3Fs, with more than 1,300+ followers.

That is a very sharp decline and if you are an investor who buys at the peak and it can get very painful to see your portfolio colored in a patriotic sea of red.

But is there value now in the company after such a steep decline?

Cooling Measures In This Decade

For years since post gfc days when the first cooling measures was introduced in 2011, the demand for private property and residential has been pretty stable and moving. It never for once dent the expectations of the public that property prices are going to come down because of the measures put in place.

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S&P500 has slumped 13.7% in Dec, largest percentage fall since 1931! Has the bull market ended? (Guest Post)

S&P500 has slumped 13.7% in Dec, largest percentage fall since 1931! Has the bull market ended? (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as el15, with 200+ followers.

Image result for bull market

Dear all

After hitting an intra-day high of 2,941 on 21 Sep 2018, S&P500 has tumbled 17.9% or 525 points to close 2,416 on 21 Dec 2018. In fact, S&P500 has just logged the worst monthly performance in Dec since 1931! Dow has also fallen 3,535 points from the intraday high of 25,980 on 3 Dec 2018 and 4,507 points from the intraday high of 26,952 on 3 Oct 2018. What is happening? Is Armageddon coming?

Most things have not changed since 21 Sep, except for…

In Sep, when S&P500 hit 2,940, the usual concerns were also there, namely trade tensions; U.S. 10Y treasury yields above 3%; Brexit; concerns on Europe; peak in earnings growth in U.S. market; slowing global growth etc. Since then, nothing much has changed except that

a) Part of the yield curve has inverted

On 3 Dec 2018, the yield curve for U.S. 3Y note and U.S. 5Y note inverted. According to the chief economist of North America at The Conference Board, he wrote in an article posted on MarketWatch 10 Dec 2018 that from the time that the above yield curve inverts, a recession typically starts from nine to 69 months, with an average of 27 months (i.e. more than 2 years).

For the more closely watched indicator i.e. the spread between the 10-year note and the 2-year note, it is still positive and not inverted. Although the spread between the 10-year note and the 2-year note has been narrowing / flattening, some strategists have noted that a flat curve can last for years and the economy can still be strong. According to an article by BMO Capital Markets in June 2018, BMO found that the S&P 500 has appreciated an average 12.3% when the yield curve was flattening vis-à-vis a 7.9% gain amid a steepening yield curve for all periods since 1980. In addition, BMO found that the S&P 500 can still rise an average 14.3% during the later stages of flattening cycles (from 50 bps to 0 bps).

b) U.S. and China have agreed on a trade truce for 90 days

U.S. and China have agreed on a “cease fire of sorts” on trade for 90 days. Notwithstanding the arrest of Huawei’s CFO in Canada and other negative headline news, it seems that China and U.S are still making some progress on the trade front post the dinner between President Trump and President Xi (i.e. it seems relatively better now than in Sep on the trade front)

c) U.S. 10Y treasury yields have dropped from >3% to 2.79%

U.S. 10Y treasury yields have dropped from >3% in Sep 2018 to 2.79% on 21 Dec 2018. This seems to be a net positive for stocks as this may reduce long term borrowing costs and increases the appeal of equities vis-à-vis bonds.

Has the bull market ended?

Nasdaq has slipped into a bear market with the 3% drop on last Fri. Most readers will be wondering whether the 9 or 10 year bull market has ended.

According to most strategists, the equity bull market typically ends when some of the conditions happen. For simplicity, I only list three conditions below (i.e. the list is not exhaustive).

a) Inverted yield curve

As per above, the yield curve is flattening but has not inverted yet. According to Blackstone, they do not believe that the yield curve is going to invert soon.

b) Negative earnings growth

It is common knowledge that 2018 likely marks the peak in earnings growth for U.S. corporates. However, it is noteworthy that a peak in earnings growth in 2018 does not necessarily mean a decline in earnings in 2019. For CY 2019, based on Factset, analysts estimate earnings growth of 8.3% and revenue growth of 5.5%.

Chart 1: Earnings and revenue growth in 2019

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Another Federal Interest Rate Hike and Lowers 2019’s Rate Hike Projection

Another Federal Interest Rate Hike and Lowers 2019’s Rate Hike Projection

The hawkish US Federal Reserve just did an interest rate hike, again. It’s the 4th and final rate hike of year 2018.
Image result for jerome powell

The Central Bank’s benchmark interest rate was raised 25 basis points from 2.25 to 2.5 percent. It’s also the ninth increase since the Federal Reserve (Fed) began raising rates from near-zero back in 2015.

Key highlights from yesterday’s FOMC meeting:

  1. The Federal Reserve (Fed) take the target range for its benchmark funds rate to 2.25 percent to 2.5 percent.
  2. Central bank officials now forecast two hikes next year, down from three rate raises previously projected.
  3. However, the Federal Reserve (Fed) continues to include in its statement that further “gradual” rate hikes would be appropriate.
  4. GDP is now seen as rising 3 percent for the full year of 2018, down one-tenth of a percentage point from September, and 2.3 percent for 2019, a 0.2 percent point reduction.
  5. FOMC pointed out to three more moves in 2019 and possibly another one in 2020.

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Sunpower (5GD): Gathering steam | Current: $0.30 | Target: $0.45 | Upside: +50% (Guest Post)

Sunpower (5GD): Gathering steam | Current: $0.30 | Target: $0.45 | Upside: +50% (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as KennyChia, with 200+ followers.

Introduction

The recent 40+% sell-down of Sunpower caught my attention as it has always been on my watchlist due to its strategic positioning in the “Green” China economy. Upon further research, it seems that the event-driven selldown had nothing to do with the fundamentals of the company, which in fact were improving (increasing order book size, earnings, and operating cash flows). In order to keep this post brief, I have attached useful sources below that goes into detail the long-term investment merits of Sunpower as well as the recent events that transpired.

The Event – America 2030 Capital

In summary, Guo Hongxin (Founder & Executive Chairman) and Ma Ming (Executive Director), made personal loans by collateralizing their Sunpower shares (approx 1.89% of Sunpower’s total issued shares). The lender is America 2030 Capital. However, the collateral was allegedly forfeited as they had breached terms in the loan contract (this is currently being disputed between borrower and lender). Hence, America 2030 Capital took control of the collateralized Sunpower shares and supposedly sold in the open market, which caused the sell down.

Guo and Ma then obtained an interim injunction to prevent America 2030 “from selling or otherwise dealing in company shares which were used as collateral for personal loans”. They also “lodged a report with the Commercial Affairs Department of the Singapore Police Force over the loan agreement with America 2030”.

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2018 XIRR Performance & Networth Updates (Guest Post)

2018 XIRR Performance & Networth Updates (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as 3Fs, with more than 1,000+ followers.

Time really flies these days when we are in our mid 30s, pegged by a combination of busy work and heavy loads of watching our children grow as each year past by.

I wanted to wrap things up for the year given that I will be taking a holiday trip to Bali with my family for the next few days until Christmas, and wanted to do a reflection of my equity performance this year before I then wrap things up for 2018 on an overall scale.

I received some good feedbacks last year on how I presented with my performance review, especially clearly positioning my winners and losers so I thought I’d continued with the same format for this year.

Please bear with me as this will be a pretty long post.

Overall Market Thoughts

This was a tough and rough year for investors because this was supposed to be an expansion year where interest rates are going higher because the economy is improving and there wasn’t a clear sign of global slowdown in the economy yet the market experienced some of the highest volatility we’ve seen in many years due to the trade wars and other stuff.

All major indexes including the DJI, S&P, Nasdaq, HKEX, Nikkei, DAX were all down for the year and STI was not spared either.

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The Feared Inverted Yield Curve is Often Useless (Guest Post)

The Feared Inverted Yield Curve is Often Useless (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as kyith.

Yesterday, I posted the latest yield that you can get if you purchase the Singapore Savings Bonds.

And a few readers main comment is that the yield curve is inverting and we should be careful.

As you can see from the 1 year and 10 year SGS bond yield, the yields look to be narrowing.

And if the yield inverts, it is a really bad thing.

I think there is validity about respecting the yield curve, but as an indicator, it might not be the most reliable.

My understanding of the yield curve

The yield curve shows the prevailing interest yield for different duration of the countries government debts.

For debts a longer tenure debt has more risk, because they are subjected to interest rate fluctuations, credit events, inflation, economic factors. Thus, when risks are higher, the interest rate investors demand should be higher.

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Is Investing In Growth Always A Good Thing? (Guest Post)

Is Investing In Growth Always A Good Thing? (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as 3Fs.

When investors like us invest in the stock market, the goal is always trying to grow our wealth over time.

Image result for coin stack

Investors are generally thrilled by the prospect of growth in general, whether they are referring to their income, savings or even the companies that they invest in.

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