Thursday, October 4, 2018

Singapore Medical Group (SingMedical)


I bought 112,000 shares of SingMedical at average price of about 43.71cts per share.

My projected minimum guaranteed yearly net profit of SingMedical going forward (at least 5 years):

(1) Ciputra Eye Indonesia: $60,000.
(2) Astra Women Clinic: $4,615.000.
(3) Cancer Centre: $2,400.000.
(4) Kids Clinic: $2,300.000.
(5) Baby & Children Specialist Clinic: $1,000.000.
(6) Pheniks: $500,000.
------------------------------------------------------------------------------------------------- Total: $10,875,000.

Below might have some contributions going forward:

(1) CHA (Vietnam & Australia market).
(2) Novena Radiology & Lifescan Imaging.
(3) New dental clinics.


What am i buying into SingMedical?

(1) SingMedical aims to be a Medical Disruptor in medical industry, especially in Singapore:
- to provide one stop solution for women & children's segment.
- to bring down the cost since they want to have centralised and owned imaging centres.
- to have tele-medicine platform that both local and patients across the region will use to consult with their specialists throughout their treatment cycle.

(2) They are in the women & children's segment which is one of the biggest market in medical industry.

(3) Most of their doctors/specialists who joined them through acquisition, have some shares in SingMedical.

(4) SingMedical wants to grow through "acquire & grow aggressively" strategy.

(5) They have a wide pool of medical specialists network.

(6) My purchase price of 43.71cts per share, market valution is about 210mil. 
With a minimum guaranteed yearly net profit of $10,875,000, PE is about 19.3X.
1H2018 net profit = $6,827,000. With straight line projection, FY2018 net profit will be $13,6mil, FY2018 PE will be about 15X. Medical industry averagely has PE of above 20X.



Portfolio Value as per October 2018


No.
Counters
No of Shares
Market Price
per Share
(SGD)
Total Value
(SGD)
1
AEM
48,000$0.820$39,360.00
2Best World50,000$1.490$74,500.00
3Centurion50,000$0.435$21,750.00
4Innotek190,000$0.420$79,800.00
5SingMedical112,000$0.455$50,960.00
6
Sunningdale
60,000$1.510$90,600.00
7
Tat Seng
Packaging
50,000$0.670$33,500.00
8
Cash


$11,670.27





TOTAL:$402,140.27


(1) I have skipped to post my portfolio value for the month of August & September as there were not much buying/selling.

(2) Cleared all my Chasen holding, even though the company seems to be good and has prospect to run up, i will just stick to my own stock criteria.

(3) Bought 2 new counters: Centurion at the cost of about 42.75cts per share & Singapore Medical Group at cost of about 43.71cts per share.





Saturday, August 25, 2018

Business Valuation


What is Business Valuation and How do i value the business that i am holding?


The fluctuation of my portfolio value from one month to the other has been forcing me to think hard and thoroughly about my valuation method in valuing businesses.

Sunningdale's share price had reached its peak of about $2.40 per share a few months ago and has dropped down to $1.40 per share as per current price (my paper profit has also dropped down by $60k).

AEM'share price had reached its peak of about $1.90 per share a few months ago and has dropped down to $0.83 per share as per current price (my paper profit has also dropped down by $50k).

Have i been wrong in valuing the businesses i am holding so that i have missed out the opportunity to take profit earlier? 

Have my portfolio management and allocation been wrong so that i have less cash to add more to those businesses that their shares price have been hit down tremendously while the business fundamental remains strong?

Have i selected the wrong businesses which are not suitable to my personality and i do not understand them?

Have i been not knowing enough that i do not know a lot of thing about the businesses i am investing in so i have failed to act correctly?

Is my current strategy correct and i just need to make some adjustments to it?

These questions have been running around in my head for minutes....hours.....
days.....nights.....weeks.....months..........still .....I do not have the answer yet.

I am still searching......trying to fix the puzzles.............

I think only time will be able to tell. 

Investing is a journey, it is a process. 

Investing is Not a destination. 

I have to keep thinking, improving my investment system with on-going experiences in many business cycles.


In this post, I will only talk about Business Valuation which is related to my First Question above.

Have i been wrong in valuing the business i am holding so that i have missed out the opportunity to take profit earlier? 

Recently i read an article about the Interview between Forbes with Prof Aswath Damodaran about business valuation. 

The link of the article is here:
https://www.forbes.com/sites/kevinharris/2018/07/17/professor-aswath-damodaran-on-valuation/


Below are few important points i have noted them down:

What is Valuation?

1. Digging through a business,

2. Understand the business,

3. Understand its cash flow,

4. Growth,

5. Risk.

And try to attach a number to the business.


Risk is a very important part in valuing a business.


In today's market, we have to think the Risk of:

1. Risk premium of the market we are in,

2. Risk premium of the rest of the world,

3. Risk currencies and how we use them in valuation,

4. Risk in business life cycle which has shortened in today market, e.g. Yahoo has started from a small startup to a successful company and to no company in 25 years.


In investing:

(1) Philosophy is more important than technique,

(2) Self introspection,

(3) Build our own investment philosophy,

(4) Think through what we think about the market,

(5) Try to figure out why companies are doing what they are doing rather than what other people think about companies or what other people think about investing.

To always keep our eyes on economic growth, as long as the economic growth is solid and able to backup the valuation of US or market equities, the valuation is still ok.


I also have signed up Investment Quadrant with TheFifthPerson recently, and i noted them down a few Valuation Models from TheFifthPerson:

(1) Fast Grower (Unstable Cash Flow): PEG (PE to Growth rate)

(2) Predictable Earnings: PE

(3) Asset Heavy: PB (Price to Book)

(4) Cyclical Industry: Price to Sales

(5) Predictable Cash Flow: Discounted Cash Flow

(6) Earnings Distorted by Depreciation/Amortization: Price to Cash Flow


To be continued..............................................................