BBR Holdings

TTI’s Portfolio Updates – November 2017

October 2017 was a busy month for me, in terms of portfolio changes. I made 2 complete divestitures, and feel really good about them.

This is just a quick update, and some of my accompanying thoughts as we go into the earnings season next week.

1. LTC Corporation

I currently own 240,000 shares.

LTC did pretty well YTD, rising a very respectable 26.42%. (In any other year, 26.42% would’ve been a monster year, but this year, the bar has been raised considerably by STI ETF)

635) LTC Corporation share price.jpg

I wrote about my thoughts at the end of 2016 after analyzing the FY16.

That post was summarized by Leong CT and republished on NextInsight:

And here’s the full, boring, long version:

Info That I Have Gleaned From LTC Corporation’s AR 2016

Well, nothing much has changed actually. The year panned out the way I expect it to be, business wise. I guess it’s been acceptable, nothing too amazing, but there’s a certain safety margin incorporated in the wide difference between the share price and the NAV.

A long time frequent reader, mslee888, attended the recently concluded AGM and has some comments on what transpired. You can read his comments in the “Recent Comments” section.

Nothing overly optimistic, perhaps even slightly bearish.

Personally, I’d continue to monitor their FCF generation and cash utilization. All that cash generated HAS to go somewhere. The most obvious place now is their development of GEM residences, which is situated just off the island of Penang. I didn’t write much about it, but that development at least, looks favorable to me when I did my DD.

Linked to what is the largest mall within the vicinity, the site has a lot of potential going for it. Any potential rewards though, won’t be in sight, so some patience is in order.

I have a lot of that.

2. BBR Holdings

The chart says it all:

636) BBR Holdings share price.jpg

Being the largest proportion of my portfolio at the start of 2017, a massive 44.44% gain is great. It single handedly helped me keep up with STI ETF, despite the drag by Dutech’s drop this year.

The share price was well supported by a series of share buybacks by the company, as well as by the sudden large increase by Dr Chiu, who is now a substantial shareholder.

I’m not sure what plans he has, but there’s no scenario whereby this is a bad thing.

Would I know at the start of 2017, that BBR would initiate a share buyback program? Nope. No idea.

But I do know the shares were, and still are, terribly cheap.

They don’t even have to do anything right. They just have to NOT do anything wrong, and stop bleeding money each quarter, and the share price should correct substantially.

As the loss making projects are gradually run down each quarter, their financial performance should improve.

I’m optimistic about their newer projects.

And for gods’ sake. Please stop doing all those fancy new technology for the sake of tech. Keep looking at your margins please. I rather you guys do nothing than do a lot of stuff and constantly lose money.

I’ve written about my long history with the management, the old posts can be found in the links, I shan’t repeat.

I do have to say that I’m a lot more pleased with how they chose to return capital to shareholders. A share buy back is much more preferred when the shares are undervalued, vs merely increasing dividends.

It inspires confidence, and the effects are more prolonged.

I did capitalize on the massive rise by taking some profits off the table. (Plus I consolidated my shares from the various nominee accounts in prior years, so if I don’t reduce my stake, I’d most likely end up in the Top 20 shareholder list in the AR17, and I’d like to not be so visible)

I currently still own 1,100,000 shares, having divested about 900,000 shares this year.

3. King Wan



Never felt more relieved.

Just divested the remaining 100,000 shares today at $0.16. I started the year with 1,000,000 shares, and now I own no shares.

I don’t know who bought them from me. Whoever it is, he either knows something I don’t (perhaps increased dividends), or he’s screwed.

I’ve previously written about my disdain for the performance of management… and nothing’s changed.

Oh actually, something did change. CFO Francis Chew left the company “to pursue other interests” (what else? Does anyone seriously give any other reason aside from this generic one?). With the departure of CFO Chew (the one guy who tried his best to answer my queries), the last good thing going for KW is gone.

King Wan is without doubt, my biggest investing mistake thus far. Ever.

I’ve only learnt 1 lesson from this:

Keep your eyes on the game. Nobody’s going to do it for you.

I trusted in the capital allocation prowess of the management and literally just forgot about this company. “Buy and Hold” as Buffett says. Difference here is that the management is not what Buffett would’ve approved.

In my defense, it was a really busy period of my life when I had to devote 100% of my time to build up businesses in my work. Thus I thought I’d just chuck it aside and let these guys grow my capital. Imagine my surprise when I checked up on it 1 big fine day.

They got proud when things were going good, and had to eat humble pie. In recent years, when everything has just gone a single way up, KW has gone exactly the opposite direction.

I mean, just for laughs, check out these earlier articles and “analysts’ predictions”:

LOL @ “special dividend”!

Perhaps the biggest early red flag that I should’ve picked up, was the IPO of KTIS.

That was the peak of KW’s fortunes. I remember clearly that KTIS IPO was done at a PE of 30+ (I’m not checking now, this is written off the top of my head)

I remember clearly thinking that “hey that’s kinda pricey for a sugar producer right? What competitive advantage would a commodity producer have to warrant that kinda PE multiple?”

Yet KW held on to the bulk of its stake post IPO.

I would’ve dumped it all to the hungry and dumb public.

I’ve previously said I’d give my coverage to my mistakes. So there, let me open up old wounds. Go ahead and re-read these. It is a damn good read.

King Wan Corporation – Part I

King Wan Corporation – Part II

King Wan Corporation – Part III

Good riddance.

4. Boustead Singapore

637) Boustead Singapore.jpg

A 9.76% ROI (and it’d be higher if we include dividends), is not bad normally, but in light of this year’s monster performance by the passive indices, this doesn’t feel much like a win.

Oh oh and before I forget, all the stated ROIs above do not include dividends, so it’s probably a bit higher. I’m just lazy to do the math right now.

I currently own 40,000 shares of Boustead.

This is a small position.

FF Wong still has my vote of confidence. A genius is a genius.

The only thing that’s bugging me constantly is whether I should buy Boustead Projects directly, or own it indirectly via Boustead Singapore.

I know this opinion is contrary to the thoughts of most other retail shareholders, but I really preferred if FF Wong didn’t hive out BP. Just keep it all together as a mega conglomerate.

I suspect a major part of the reason is just succession planning. He has to elevate and promote so many lieutenants, so better to split it up so that each can become their own bosses.

This just makes it more complicated for me to assess.

Obviously Boustead is in a tough position now, with the situation with O&G.

That’s why I’m keeping it as a small position.

At the 1st sign of a sustained recovery, I’m putting my money on FF Wong again. In a big way.

5. Comfort Delgro

well, shan’t waste too much time here.

Bought at $1.98, Sold at $2.02 barely a month later.

Was hoping to build a large position, but it never really dropped much after I bought. There were only 2 trading days where it went below my entry price, and that’s about it.

Also, further DD made me more cautious about their entrenched position, and the stake was really too small to warrant wasting time monitoring.

On top of that, as I alluded to in the previous post, I’m selling some positions to reallocate capital into a new idea. And I intend for that position to be a big one.

Wealth Destruction Behaviors – TTI’s Personal Anecdotes

6. Geo Energy Resources

Not bad at all.

638) Geo Energy.jpg

30.43% YTD, add in a few more % points for the dividend, and it’s turning out to be a fine investment indeed.

Well, anything that beats the index this year, is a fine investment.

I currently hold 500,000 shares, at an average price of $0.168.

I think I’d likely double my money from $0.168 before the year end. In fact, my purchases in July is already starting to look like a stroke of genius. (But the purchases of Dutech…. not so):

TTI Bought >$100K Worth Of Equities In July… Howard Marks’ Memo Better Don’t Come True Right Now!

Q3 results look promising, but unfortunately my DD tells me that their coal production would likely disappoint again this quarter.

I’m expecting them to report total coal volumes mined to be between 1.8 – 2.2mil tonnes.

Which would be a substantial improvement from Q2, yet below that of Q1.

Full year, I find it hard to see how they’d meet their stated 10mil target.

Probably not, even if TBR mine comes online soon.

Results would still be stellar though, as coal prices continue shooting through new highs. In Q3, China’s imports have held up much much better than most analysts were expecting. (Read Philips report on how they expect coal prices to drop in Q3. To their credit, they stuck to their buy recommendation as they believed it’d be transient)

I’m watching this space tightly, it’s going to be an exciting Q3 and Q4 for Geo.

7. Dutech Holdings

Tough year for Dutech:

639) Dutech Holdings.jpg

A -17.78% in a year where STI is up almost 20% (or more, not sure of the latest figures), is disastrous.

I currently own 701,000 shares at an average price of $0.287

I’m keeping faith with Dutech and Johnny Liu though.

Unfortunately, I don’t expect the business to turn around in Q3 or Q4 of 2017.

My analysis of their downstream peers (Diebold Nixdorf and NCR Corporation) tells me that globally, their High Security business is still going to be impacted heavily.

Diebold just reported earnings, and it’s not pretty. Major ATM clients are still delaying confirming orders. On the plus side, they are still expecting orders to be confirmed in the coming months.

I will be watching how Johnny Liu continues to steer the business towards the software intensive “Business Solutions” division, and how they integrate their newly acquired Metric.

It’d be a while yet, but I’m actually comfortable holding Dutech as a core, long term holding. I won’t make the same mistake as with KW though, I’m keeping my eyes on the game this time.


As mentioned in an earlier post, I’ve started accumulating a major position in a new idea. I’m pretty optimistic after doing my usual comprehensive DD, and hence, my position will reflect my optimism.

When I’m done, I hope to accumulate at least a 6 digit position.

Already, I’m slightly up, but I intend to continue to average up.

Not ready to reveal it yet, will write about it soon.

This year hasn’t been too bad ROI-wise, yet I’m still finding it tough to beat STI ETF.


Banks and Developers.

Those are the ones going ballistic this year.

Also, my US listed equities have not done as well as SG ones. I’ve made some major mistakes in the midst of tinkering and trying out ideas, particularly with options. 1 major mistake was entirely due to greed, something that I never thought I’d do. Damnit. I should’ve wrote about myself when talking about “Wealth Destruction Behaviors” in my previous post. Dumb, greedy mistake.

In fact, SG portfolio ex-US, would likely have beaten STI ETF, but that’s not how portfolio tracking works right.

We have to take in the bad with the good. Cash drags, transaction fees, even holding or margin costs etc, all has to be accounted for to give an accurate picture.

Thus far though, with the insight and the adjustments I’ve made, and the new rules that I’ve implemented, results have been good. I’m still trying it out, but it bodes well for 2018 and beyond.

I believe longer term, my options strategy would be a force to be reckoned with, ESPECIALLY so in down years.

Let’s see.

In terms of portfolio size, 2017 is likely to see a substantial gain, even though there’s been minimal capital infusion. It has been difficult to NOT make money in 2017, looking at how the markets have behaved.

I’ve instead preferred to channel whatever cashflow I have left (after the wealth destructive trail of the 2 kiddos) into my property fund.

Anyhow, I’ve always preferred to watch the ROI figures rather than the actual portfolio size. The quantum can be easily increased by channeling more funds into equities and options rather than into my property fund. The ROI is the fun and challenging part.

That’s all I have here.

Oh, and SGX has sent out emails for race pack collection for those who have received complimentary tickets for the Bull Charge 2017, so go collect them.

As always, Godspeed.


BBR Holdings FY17Q1, Geo Energy Resources FY17Q1, Results From Options Strategy (1 month)

A patient gave me some really good advice the other day: She said, “Dr XXX, now your kids still young, wanna go anywhere just go la! Next time go to school very hard already!”

I’ve just came back from a trip  barely 1 month ago, but I guess that advice really made sense to me. (Or perhaps I just want it to make sense. The mind sees whats the heart wants right? haha)

525) going on holiday.jpg

So, it looks like I’m gonna have to break the promise I made myself, which is no more travelling for the rest of the year as I try to get more work done. It’s kinda indicative that I might be having too much fun when on the plane back, my son asked “papa, so where are we going next?”

He’s barely 4 yrs old and he’s been on 5 trips to 5 different countries, with probably a 6th scheduled this year. I think I only made the 1st ever trip out of the region when I was… in my mid 20s. Kids these days are living better and better.

With the flurry of results that were released last week, I’ve only had time to work through 2: BBR Holdings and Geo Energy Resources. So here’s my quick take down on what transpired.

BBR Holdings. I’ve recently written about how they’re likely to show a turnaround, earnings wise, in FY17, with the contribution from Lakelife EC.

BBR Holdings – TTI’s Analysis Of The Latest Happenings

And they certainly did:

526) BBR Holdings FY17Q1.jpg

Just to give a sense of how much of a turnaround it is:

FY17Q1’s earnings alone, is about 3 times that of FY16 Full Year’s earnings!

EPS in Q1 alone is 1.75 cents, and if the company continues at this rate (highly unlikely), full year earnings would be 7 cents per share, which would be multi year highs. It is highly unlikely that would transpire though, I’ll elucidate why later.

527) BBR Holdings earnings FY17Q1

As we can see here, the long term track record of earnings looks like this:

FY10: 6.36 cents

FY11: 6.55 cents

FY12: 4.21 cents

FY13: 7.10 cents

FY14: 3.66 cents

FY15: 0.76 cents

FY16: 0.37 cents

So with FY17Q1’s 1.75 cents, management will really have to screw up the next 3 quarters to avoid showing an improvement in earnings from FY16 huh.

The problem is, there is a chance they really could do that…

Breaking down the earnings picture further, we see that the company raked in $5.54mil in profits in Q1. Of this $5.54mil, the lakelife EC project contributed $5.78mil.

Yup, that’s right. The project contributed more than what the group earned, meaning that BBR Holdings (less Lakelife) was very unfortunately, STILL bleeding money in Q1.

The devil is ALWAYS in the details. Damnit.

This is a major disappointment for me. I’ve always maintained that the basic premise of my investing thesis lies in the fact that I’m expecting BBR Holdings to stop bleeding money in its general construction projects. It’s been 2 years and counting for gods’ sake!

The only silver lining from this, and I’m really grasping at straws here, is that the loss (excluding lakelife), would have narrowed to an almost negligible $0.2mil.

On top of that, the company has recognized earnings from 296 units in 2016, and now, in FY17Q1, they’ve recognized earnings from a further 194 units. That means there’re 56 units left to be recognized, probably in Q2.

My rough estimation (which has been fairly accurate thus far) is that these 56 units would contribute approximately $1.6mil in Q2.

Other parameters came out to be fairly acceptable. FCF was flat in Q1, but that’s because the company spent $1.4mil on a new storage facility for their PPVC units. Going forward, PPVC is supposed to be a major competitive edge for the company.

Now, they are certainly not the 1st movers, or the only movers for PPVC. But BBR has had quite a few projects thus far involving PPVC (NTU, Wisteria, housing at Upper Aljunied Road), and as with any new tech, they’d have had a steep learning curve. By now, they should have ironed out any clinks in the workflow, and improve on their efficiency.

By right.  <—- emphasis.

If only we have a FF Wong running the show here. If only.

NAV has also increased from 42.48 cents in FY16Q4 to 44.12 cents currently.

This means that the company is currently trading at a mere 50% to book value. Come on, even for builders, that’s considered very very low isn’t it? The share price has risen from $0.16+ to the current $0.22 or so. I think it’s still not reflective of the value of the company though.

Wide discount to book value, minimal debt on its balance sheet, FCF +ve in the last FY.

BBR Holdings has a lot of pluses currently. The 1 and only bug bear that’s dragging down the share price, is the earnings picture. We just need the general construction arm to stop bleeding. Thus far, it’s bleeding longer than I expected, so I shall stop giving any projections.

The current earnings release also did not elucidate any further on their malaysian projects. Nothing on new contract wins, despite having hinted at winning contracts related to MRT2 and other malaysian government contracts. (See my earlier post on that) Current order books stands at 215mil, which is the lowest it’s been in the past 7 years that I’ve data on.

Geo Energy Resources’ FY17Q1 is really interesting. Although I traditionally take a bottom up, focused, deep value approach, for Geo Energy, my modus operandi has always been to focus on the macro picture.

This is because it’s obvious that the current and future coal price is by far the main consideration when it comes to Geo Energy.

Geo Energy Resources Investing Thesis – Part I

Geo Energy Resources Investing Thesis Part II

In this aspect, the markets are pretty forward looking when it comes to Geo Energy.

The company delivered on the earnings front:

528) Geo Energy Earnings FY17Q1.jpg

On paper, it looks pretty damn impressive. Revenue grew 735%, while earnings flipped from being negative a year, to a massive US$14.5mil.

Yet the share price dropped the next day.

Now, let me try to illustrate a point here.

On InvestingNote, someone said he bought just prior to earnings release, because he’s expecting stellar results, and he hoped to make a quick (probably small too) profit on this.

I warned then, that I’m not so sure that’s going to happen. The problem with this chain of thought is that it’s too simplistic, it’s pretty much level 1 thinking. As a matter of fact, I actually sold 200,000 shares at $0.32 just prior to earnings release.

My rationale for that is more macro in nature. But I was expecting the share price to dip after the earnings release, despite expecting good results all the same. I’ve since bought back the 200,000 shares at a lower price, further lowering my average price.

Now, the problem with thinking “ok, results are going to be stellar. I’ll buy before it comes out, and sell after it comes out for a quick profit”, is that EVERYONE knows the results are going to be good! Which is why I said that’s level 1 thinking.

It’ll only work out if you know and everyone doesn’t. Or if everyone expects it to be good, but it turns out to be SUPER good.

Why then did I sell 200,000 shares, and was confident I’d be able to buy back at a lower price?

The macro picture.

The company increased it’s average selling prices in FY17Q1, from US$38.93/tonne in FY16Q4 to the current US$39.45/tonne.

The slight disappointment is that they moved about 2.2mil tonnes of coal in Q1, vs 2.36mil tonnes of coal the previous quarter. The reason for the slight dip is that seasonally, it’s been raining and that resulted in some days where mining activity had to stop.

That’s not good, but it doesn’t just affect Geo Energy. Adaro Energy, the largest (i think, or the 2nd largest) coal miner in Indonesia, also gave the same reason for a flat coal production in Q1.

If that’s the case though, we’ve got a bit of a problem.

Because, Q1 is not even the period where Kalimantan has the highest rainfall!

529) South Kalimantan weather.jpg

The peak rainfall is usually towards the end of the year, around Q4.

The smaller “peak” each year, coincides with the March, April, May periods. Meaning the rainfall in South Kalimantan (Kalimantan is a big place, the SDJ mine is in the south) increases gradually from Jan to May period, before falling quickly in June, and we’ll have relatively dry days all the way till Nov/Dec when the rainfall received suddenly jumps up to the highest for the year.

So if Q1 rainfall is enough to limit coal miner’s coal production…. hmmm, won’t Q4 be a problem?

I checked the past records for Q1 2017:

530) South Kalimantan Q1 rainfall.jpg

Now, I’ve arbitrary taken 18mm of rainfall as the amount that would disrupt some mining activity for the day.

In Q1, I’ve counted that there are 18 days where the rainfall exceeded 18mm.

In Q2 thus far, and we’re smack in the middle of Q2, we’ve 12 days where the rainfall exceeded 18mm.

So yeah, you can make your own conclusions from this data.

In my personal opinion though, the rainfall, and it’s effect on coal production, is still not the biggest factor. The biggest factor, is of course, the coal prices that Geo Energy can sell it for. I’ve previously described why:

And the forward picture in Q2 is not good. Coal prices have been dipping since the start of Q2. Literally, since the start of April, it’s just been dropping relentlessly.

All credits to

531) sxcoal.jpg

On top of that, China’s NDRC has recently indicated that they’re going to limit the import of low quality coal, the bulk of which comes from Indonesia.

Essentially NDRC wants to limit the import of low calorific coal. So what exactly is low quality coal?

NDRC didn’t state clearly, except say that it’s usually “high sulphur content” coal , with high ash levels. These are usually the GAR 3200, GAR 3800 coal from Indonesia.

Geo’s coal characteristics, according to SDJ mine’s JORC report (page 21):

89 % of coal tonnes come within a TS range of 0.1 % to 0.3 % x

94 % of coal tonnes VM is greater than 39 % x

81 % of coal tonnes come within an Ash range of 4 % to 7 % x

89 % of coal tonnes GAR Energy come within a range of 3900 to 4300 Kcal/Kg

I’m not sure if Geo’s coal falls into NDRC’s classification of “low quality”. I suspect not. Geo’s sulphur content is well below the 1% limit that China sets.

Alright, so all that is bad news. Now for the good news.

Summer is coming! Traditionally, China’s power usage shoots up in the hot summer months, as the chinese crank up their air conditioners. The power plants know this, and they stock up on their coal stores 1-2 months before that. That means sometime towards the end of May – June, utilities would have to increase their buying.

Most coal traders believe that the utilities would have to pick up their buying towards the end of May. Coal price for GAR 4200 coal is currently being offered at US38-39/tonne at most ports.

The other good news, or rather, potential good news, is that the company is guiding that the acquisition of TBR mine will be completed sometime in 2Q. Personally, I believe they will announce an offtake agreement together with the acquisition. Now, completion of the acquisition of TBR would likely be a major catalyst for the share price, and right now, this is the main catalyst for in my investing thesis.

TBR would mean that the management’s guidance of 10mil tonnes in FY17 would be more likely to be met. And it’d be a major plus for the management’s strategy of amalgamating both plots of mines (SDJ and TBR sit side by side). Efficacy shoots up, as both mines use the same infrastructure, while total mined volume will rise exponentially.

So let’s go back to the financials and try to look at some tea leaves to predict the future.

Right now, the company just did 2.2mil tonnes of coal at US$39.45/tonne. The company also reported some earnings from coal trading, and from their mine management agreement with their neighbor AJE. I’ve also noted that these extra revenue generators lifted the gross profit margins from the coal mining segment. (Their GPM figures are higher than that of coal mining)

In my DD, I’ve played with the variables: total tonnage moved for FY17, Average selling prices, and the operating costs, to finally derive a range of possible share prices. It’s kinda cumbersome (and monotonous) to type all that out here though, so I’ll just take the lazy way out and assume the company performs the same for all the subsequent 3 quarters for FY17.

This means that assuming Geo Energy moves 8.8mil tonnes of coal in FY17 (they fail to meet their 10mil guidance), at an average price of US$39.45/tonne (ASP for Q1), approximately, we’ll be expecting US$58.54mil in earnings for FY17.

I’m going to loop off a huge 25% chunk from this for a bit of buffer as the coal prices have since dropped from Q1, and also because we are making some projections and these results are unrealized.

That leaves us with US$43.9mil. The current total share base is 1,212,273,113 shares, but I’m going to use 1,329,273,113 shares instead as the company is going to issue 117mil new shares as part payment for their acquisition of TBR.

That means that the projected full year earnings would be 3.3 US cents per share or SG 4.6 cents. Assuming a conservative PE ratio of 10, we have a fair value of 46 cents.

Obviously all this is contingent on many things going their way. There are so many variables, it’s hard to project with certainty. I think currently, the next major thing to look forward to, is the completion of TBR and the announcement of an offtake agreement.

Currently, I still own 400,000 shares, bought at an average price of $0.157, and upon receiving dividends at the end of May, my average price will be further lowered to $0.147.

Lastly, it’s been exactly 1 month since I’ve implemented a new options strategy. I’ve written about it at the halfway mark:

Bonus From Flyke (!!!) + Results From Enhanced Options Strategy

I’ve since tweaked it a bit to suit my personal style. It’s kinda hard to explain in detail, but it has mainly to do with my thoughts around exercised options. For certain companies, I’m now more willing to recognize exercised options and “book in” profits instead of selling more options on them. That increases my buffer to capitalize on days with bigger swings.

Anyway, the results look like this:

532) Options April 2017.jpg

533) Options May 2017.jpg

Total cashflow received from 12/04/2017 – 12/05/2017: US$13,657.25

That works out to be a very cool SG$19,120.15 in 1 month!

That’s more than double of my track record previously. I’m still amazed by how tweaking and making tiny changes, can compound and have mega results. Kinda like the butterfly effect. (Theory that something as tiny as a butterfly’s fluttering of wings can eventually lead to a tornado occurring half the globe away)

So much so that it justifies me increasing my allocation gradually. I’d like to see more data than just a single month, but it’s been very very satisfying indeed. Let’s see how it turns out, but at this stage, I’m likely to increase my ammunition here.

VRX has also done wonders with Q1 results and gone ballistic. Ballistic is probably under-describing it. It’s up >50% in the 2 days after ER. Ah, US is just a crazy place.

I haven’t done any calculation regarding my portfolio, but its certainly going to be a stellar Q2. I’m confident that SG TTI has beaten STI ETF in Q2 thus far at least. And I haven’t even received a cent of the dividends that’s all coming in at the end of May.

It’s likely that there’ll be less updates here, going forward. It’s kinda tiring actually to write about stuff. My thoughts obviously move way faster than typing.

As always, happy hunting!