Review of my Sitra Holdings Purchase (5LE.SI)

I rarely buy any stocks based on people's recommendation, at least not without going through their rationale first. However recently, I bought Sitra Holdings based on the call made by The Little Snowball. Their case made for Sitra was fair and substantiated by (or very similar to) previous analyses found here and here. I entered at $0.017. 

Disappointingly, Sitra's 1H2017 results did not deliver as expected, with losses increasing from $245,000 to $643,000. 

Voluntary Salary Deduction

While most analyses had been lauding the company's steady trajectory to an eventual profitability, they have missed out a component enabling that - voluntary management's salaries reduction. Senior management previously took a pay cut to ease the finances of the company. These voluntary salary deductions were reinstated in the latest set of results and indeed, selling and marketing expenses together with administrative expenses increased. 

Senior management reinstating their salary arrangements may be a good sign that company is turning around and they are more comfortable receiving their original salary. However, this factor may have been "beautifying" previous results and maybe the path to profitability may not be as straightforward after all. 

Forex Losses

While results were not fantastic in this half year, peeling back the forex losses will reveal a nicer set of numbers. Ignoring forex losses of $0.43M parked under other losses - net, the losses narrow to $213,000 which is definitely an improvement from the previous 1H result. 

Conclusion

Taken together, it is fair to conclude indeed, the finances of the company are improving if the above two points were factored out. However, senior management fees should be the rule rather than exception and hence the company do have to work a bit harder to eke out profits.

Looking at the cash flow statement, Sitra only has $2,000 cash at the end of the period, paralyzed by high trade receivables and bank overdrafts. This is another area that the company has to brush up on to survive the next economic downturn. Hopefully, rights issue will not be called as I do not hope for a long-drawn investment in Sitra. If need be, I am willing to dispose this stock at a loss as my capital outlay is purposely kept small due to the speculative play. 

To Hold or Sell Apple Inc.

Every buy or sell decision made in the stock market is a deliberate and conscious decision to me. This is because of the numerous factors that are unique to each stocks and also due to many conflicting teachings I had received over years.

Today, I'm particularly conflicted on whether to sell my Apple Inc holdings which I bought at $88.58 27 May 2014. As of now, Apple is trading at $102.25 - representing a gain of 15.4%. The reason I bought Apple was quite clear and it was to bank on the upcoming release of iPhone 6 and also a bet on iWatch release. The primary aim of my buy decision had been achieved but as time goes by I realised Apple had further upside in iPhone 6 sale results and quarterly results. After Apple's quarterly earning was released on 20 October where 39 million iPhones were sold and EPS came in higher at $1.42, all my reasons to hold Apple were fulfilled and stock price rose accordingly.

So is it time to sell now?

That is my dilemma which I hope to sort out here. Instead of asking is it time to sell, I should ask, "are there reasons to hold?" Therefore, I listed a few thoughts on the reasons to hold and also counter-arguments to them.

1. iWatch has been revealed to be be released in 2015 and this will provide impetus for stock price. However, it is a long wait to 2015 where macro market conditions are unknown to us. Furthermore, iWatch may be a miss or that its earning potential is not significant.
2. Apple Pay announced today may be a great integration to iPhone 6, strengthening the ecosystem of the iOS and generating revenue. That said, I think this argument is lacking firstly because of other existing paying system like Google Wallet. Apple Pay is definitely not a new innovation that can push stock price. 
3. Next quarter results should be fantastic. Given that this stellar quarter earnings did not even include iPhone 6 sold in China, next quarter should be impressive now that iPhone 6 is released in China. However, as per point 1, it is a long wait to the next quarterly results and the next 3 months may not guarantee that Apple may rise or maintain its level today. 

As you can see, for every point I had listed, I have some counter-arguments for it and there lies the dilemma. To sell or hold Apple? 

After much consideration, I have decided to keep my Apple stocks so as achieve my mantra of investing  on the stocks rather than trading them. Some people may say that Apple is losing innovation and that  iWatch may not live up to its hype, however to me, it is clear that Apple is still dominant in the smartphone market. I acknowledge that Apple may become Nokia or Blackberry one day. But the day is not today. Apple continues to sell iPhones and maintain an economic moat around its business.

Unless 1) global economy enters recession / stock market turns weak (I believe Apple product will lose its shine in recessions), or 2) when its earnings start to disappoint or 3) Stock price outstrips fundamental value, I'll still probably keep this stock.

Basics of Buying Stocks No One Talks About

Hopefully after reading some of the books I recommended, you will have a better understanding of investments in stocks. While you may acquire some strategies to spot undervalued companies or sort out your investment objectives, you will realise that you still do not know how to buy/sell a stock. Most investment books do not provide "manuals" on how to buy/sell stocks and you will be overwhelmed when you actually open a trading account. Hence, I aim to bridge this knowledge gap. In addition, I will also touch on some confusing trading jargon I faced during initial stages of investing
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Stock Quote

In a typical stock quote, you will find the following components: Last Done, Change, Buy Vol, Buy, Sell, Sell Vol, Vol. 

Last Done: When you buy a stock, you are buying it from a seller. Hence when a buyer's price matches a seller's price or vice versa, there will be a transfer of ownership (from seller to buyer). Last Done is just the price at which the latest transfer of stock took place at.

Change: It refers to the current price change from the prior day's closing price

Buy: Price where buyers want to buy the stock at

Buy Vol (Volume): The amount (volume) of stock that is queueing at the Buy Price

Sell: Price where sellers want to sell the stock at

Sell Vol:  The volume of stock queueing at the Sell Price

Vol: Volume Done up till the current point

Lot/Share?

1 lot = 1000 shares. In Singapore, stocks are generally traded in lots

Stock/Shares/Equity?

These three terms are often used synonymously. They represent the ownership of the company in question.

  

Trading/Investing?

In certain context, they can be used interchangeably. In others, they are as different as day and night. For example, if you want to tell a friend that you've started to gain interest in buying stocks. You can either say "I'm interested in trading stocks/investing in stocks". 

However, in investment contexts, there is a clear line between trading and investing. Trading is regarded as short term buying and selling of stocks in hope for quick capital gains. The time horizon for trading typically range from seconds to weeks. Trading is mostly focused on capitalising market movement of stock prices. 

Investing, on the other hand, focuses on the fundamental of companies. Objective is to ride on the potential growth of companies, leading to higher share price (see how I'm using stock and share interchangeably). Time frame ranges from months to years.   

Relationship between Brokerage Houses & SGX

Brokerage houses are companies that provide the service to buy and sell stocks on the local exchange, Singapore Exchange (SGX). SGX is just like a marketplace where brokerage houses are stallowners that barter stocks instead of meat.   

When you open a trading account at any local brokerages, they will also open a Central Depository (CDP) account with SGX to deposit any stocks you buy. Therefore, SGX also acts like a stock bank.

You may open a trading account at any of these brokerages: DBS Vickers, CIMB, Phillip Securities, Lim & Tan, UOBKH, Standard Chartered, iOCBC

For the full list of brokerages, go to http://forums.hardwarezone.com.sg/stocks-shares-indices-92/list-brokage-firms-available-singapore-589227.html for more information.


Hopefully, I have answered some of the common beginners' question here. I understand that one may have too many questions when starting out in investing, hence you can always drop a comment. I'll update this post whenever there is a question asked (which I highly doubt so since it's so obscure!)
Peace out~!

Reading List for New Investors

I started my investing journey solely by reading a few select books recommended by people on the Internet. I would use to read them during rest time or the long waiting in the firing range. Army mates used to ridicule me for reading investment books instead of playing PSP or cards. Some gave snide remarks like, "You have the money to invest meh?". Looking back, those are time well spent!

Below is the list of books I've read and I will also TRY to recall some of the key concepts covered in each book and the usefulness of it. Please pardon if it is somewhat erroneous because these are books I read between 1 - 3 years ago! 

A Random Walk Down Wall Street: The Time Tested Strategy for Successful Investing by Burton G. Malkiel
This lengthy-titled book gives readers a general guide to navigating the financial market. For instance, he advises that investors use four basic determinants to help estimate proper values of companies.

1. Expected rate of growth. Larger growth rate of earnings and dividends, higher the price.
2. Expected dividend payout. Higher percentage of dividend payout, higher the price. However, other factors are not considered. Poor prospect company may pay good dividend while expanding company may hold back dividend like Apple. 
3. Degree of risk. Naturally, higher risk, lower price.
4. Level of market interest rate. Lower interest rates, increase in stock price expected. 

In addition, the author recognises that an average investor will find it hard to beat the market. Hence he has a few recommendations for us. These include saving to invest, buying your own house, understanding your own investment objectives before investing

The Intelligent Investor by Benjamin Graham
Benjamin Graham is one of the "founding fathers" of value investing. Warren Buffet, himself, was mentored by Graham. While the book does not impart techniques to specifically select stocks, it discusses a wide range of topics. Eg. Investment vs Speculation, Portfolio Allocation, Dividend Policy.
The book provides an excellent foundation for beginners to learn investing; the principles of investing. Personally the book had convinced me to go for investing compared to trading. Though many use these terms synonymously, there is a big difference between these two which I will discuss some other day.

The Warren Buffet Stock Portfolio: Warren Buffet Stock Picks: Why and When by Mary Buffet, David Clark
This was the latest book I had read during the free time in reservist. In this book, we are introduced to how Warren Buffet chooses companies to invest in. Basic concept is to have the company possess a reasonable economic moat and increasing EPS (earnings per share).
Using the increment EPS, the book further teaches us how to project the stock's future price and see whether it's "potential" gain might warrant a buy now.
Ever since reading this book, I had only exclusively used this method to value a stock. I would say the method was fairly accurate because the screening of economic moat and increasing EPS had already ensure that the company is very strong.


Winning the Loser's Game by Charles D. Ellis
Along the same line as the above-mentioned  books, Charles aims to tell readers how to behave rationally in the stock market. Also, how to balance their portfolio of companies. The mix is determined partly your purpose of investing purposes (for growth, passive income or inflation?). He also advises investor to diversify within each asset class and between asset class.
This book covers what in already in Benjamin Graham's and Burton's books. So if you are not keen in reading, you can skip this book for the other two.


Books are the first step towards the world of investing and it is imperative that one read at least one or two books. This ensures that the person knows what is his investment objectives and can work gradually towards them.

First Post

This is the official first post of this investment-related blog. Because I have not done blogging for a few years now, I'm not well-versed in the mechanics of blogging. So I'll introduce my profile here in first post instead and also state my intention of starting this blog.

Profile

I am a 23 years old student currently studying Chemical Engineering at National University of Singapore. I first picked up investment knowledge during the lull periods of my army days. My first purchased stock goes back to 8 November 2011. This translates to me heading into the third year of my investment journey!

My interest in stocks are primarily due to my relatives and parents who trade stocks for capital gains and also to stave off their gambling needs. My investment influences come from successful individuals like Benjamin Graham and Warren Buffet. As you can infer, I am more of a investor rather than a trader. Consequently, I will touch on fundamental aspects of companies. 

Purpose

-  To help my peers who are not well versed in investing.  
A number of my female friends have already started on their careers. However, when quizzed about their savings or thoughts on investing, I was surprised to learn that they have no such plans. While I promised to teach them, I have no much spare time to individually introduce them to the world of investments. Hence this blog

- To share and receive good investment ideas
Like many other investment blogs floating around in the internet, I strive to share ideas about undervalued stocks and also receive feedbacks. This will aid me in my journey to gaining more insights in the stock market. Furthermore, I am currently at a crossroad between pursuing a engineering career or an investment career. I hope to meet people from these two industries who can provide valuable advice!

- Archival purposes
Anything written by me here is as it is. Years down the road, this blog will serve as a record when I look back at my investment decisions.


So, this is the end of my first post and I hope that it gives some foreshadowing for what is to come later. The next post shall be about the types of books I've read as a beginner and recommend to newbie investors. In addition, I will give reviews of the brokerages I am using and let newcomers decide which one to use.