Review of Cosco Shipping (1919.HK)

I hold 130,000 shares of Cosco Shipping Holdings at an average cost of $11.73 HKD.

This stock pay a dividend of $2.21 HKD in Dec 2022. My cost has reduced to $9.52. The current price is $7.84 giving me a loss of 18% ($37,000 SGD).

I cannot understand why the stock price is so low. At the current price, the PE ratio is 0.97 times and the dividend yield is 42%.

The quarterly financial figures showed that the earnings for 2022 is likely to be 20% higher than 2021.

I expect that this stock will give another bumper dividend after the close of the 2022 results. Maybe, the dividend will be another $2.21 per share.

The debt is 39% of equity, which is quite low.

The forward PE ratio for this stock is 4.2 times, based on the analysts estimate. This suggest that the profit is likely to drop by 4 times. This is probably likely to occur for 2023, assuming that the capacity oversupply brings down the earnings.

I have read forecasts that the earnings are likely to drop by 60% annually over the next few years. I find this forecast to be speculative. I did not see any report to substantiate it.

The stock trades in Hong Kong at a discount of 33% from the price in Shanghai. Overall, I find the fundamentals to be excellent. I will hold on to the stock until the release of the 2022 financial results and review my decision at that time.

Note - I am giving an observation. I am not giving financial advice.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1284

Integrated health plan does not cover congenital birth defect

 My friend have a strong trust in the integrated health plan. He likes to buy the top plan to cover private hospital and is willing to pay the high premium. He also read the coverage and policy conditions carefully and talk to the insurance agent to clarify any doubts.

Recently, he came across an unexpected problem.

He had some problems with irregular heartbeat recently. He carried out a thorough medical checkup. The doctor discovered that he had a congenital hole in the heart and a faulty valve.

He thought - how fortunate that he had a complete integrated plan coverage. That would take care of his financial problem.

He got a shock. Congenital defects are excluded from the coverage.

My friend has been insured under this plan more than ten years. He is now approaching 60 years. All along, he was not aware of this medical defect.

He recalled that the medishield plan (on which the integrated plan was built on) was extended to cover congenital defects many years ago.

The insurance company said that this coverage applied to integrated plans taken after the change of government policy. It does not apply to insurances taken earlier.

I find this reason to be ridiculous. My common sense indicates that the inclusion of congenital defects should be applied to all coverages, and not those taken after the change of government policy.

I was not sure if he had since resolved this issue with the insurance company.

Over the years, many people have consulted me on claims settlement matters. The problem arises with the interpretation of the policy conditions, and the obvious effort by the claims officers to reduce the claim payment as much as possible, to the detriment of the customers.

This is a big disadvantage of an insurance system that is run by private insurers to make the most profit.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1287

Travel insurance

 Someone asked me if he should buy travel insurance.

I told him that the premium is a few dollars. He can decide whether or not to spend this money. He does not need to ask me.

If he wants to spend $100 on a dinner, he can go ahead. He does not need to ask me also.

He can ask the insurance agent or marketing staff about the travel insurance coverage. I have no idea what is being covered and what is the premium charged.

Anyway, I never buy travel insurance over the past decades. I found it to be unnecessary.

But my family members, being typical Sinkies, want to buy travel insurance all the time. I do not argue with them It is their money.

I think that they never made any travel insurance claim. So, they are giving a lot of profit to the insurance company.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1286

Review of Alibaba (9988.HK)

I hold 15,000 shares of Alibaba (9988.HK) at an average cost of $101.65 HKD. My total investment is $260,000 SGD.

At the worse point, I saw a drop of 40% on my holding, giving a loss of $102,000 SGD.

The stock price has just recovered to my cost. The analysts are positive about this stock as it will benefit from the reopening of the China economy (after the covid lockdown) and the listing of Ant Financial.

However, I am worried about the fundamentals. It has a TTM PE ratio of 135 times and a forward PE ratio of 10.81 times. This implies that the profit will increase by 12 times in the coming year.

I looked at the financials for the first three quarters of the current financial year. The earnings are still weak. The analysts are projecting strong growth for the financial year started 1 April 2023.

I sold 5,000 shares last Friday. I will sell the remaining 10,000 shares on Monday. After that, I will have 0 shares in Alibaba.

Note - I am sharing my personal view. I am not giving financial advice.

Tan Kin Lian

https://fisca.sg/ArticleDisplay.aspx?ID=1285

WOTC - Fair wage for each job

 Wisdom of the Crowd: 70% of respondents suggested to use data analytics to recommend the fair wage for each job based on supply and demand

https://tklcloud.com/Crowd2/chart3.aspx?id=2793

Wisdom of the Crowd - New Issues

 

1. How should Singapore's state media handle its international news?
2. Should the state media safeguard Singapore's interest in its news reporting?

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https://tklcloud.com/Crowd2/vote.aspx

Review of Cosco Shipping (1919.HK)

 I hold 130,000 shares of Cosco Shipping Holdings at an average cost of $11.73 HKD. The current price is $7.84 giving me a loss of 33% ($87,000 SGD).

I cannot understand why the stock price is so low. At the current price, the PE ratio is 0.97 times and the dividend yield is 42%.

The forward PE ratio is 4.2 times. This suggest that the profit is likely to drop by 4 times. However, the financial figures showed that the earnings for 2022 is likely to be higher than 2021. This does not support the higher PE ratio.

The debt is 39% of equity, which is quite low.

The stock trades in Hong Kong at a discount of 33% from the price in Shanghai.

Overall, I find the fundamentals to be excellent. I cannot understand why the stock price dropped by 33% from my cost.

Note - I am giving an observation. I am not giving financial advice.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1284

WOTC - Economic prospects for 2023

 Wisdom of the Crowd: 52% of respondents said that the economic prospects for Singapore is bleak in 2023.

https://tklcloud.com/Crowd2/chart3.aspx?id=2792

Tesla's production and delivery figures for 2022.

Tesla delivered 1.3 million vehicles in 2022, a growth of 40% over 2021. This growth rate is probably among the highest in the industry.

The growth rate for NIO is 34% for 2022. The growth rate for BYD is 184% but the total EV sold is still smaller than Tesla.

There is a fear that Tesla will lose out in its competition with BYD. However, most analysts expect the EV market to grow rapidly over the next 5 years. Tesla will be able to sell all the EVs that it produces in this expanding market.

Why did Tesla miss its growth target of 50%? The actual growth of 40% indicate a shortfall of 100,000 vehicles.

At the end of 2022, Tesla had 70,000 vehicles that were produced, but were not delivered. The bearish analysts said that it is due to a drop in demand for Tesla.

Tesla could have suffered from this drop in demand. However, there are two other reasons for the lower deliveries:

a) Many customers in America wanted to delay the completion of the purchase to 2023 to enjoy the tax incentive that will come into force.

Tesla introduced a discount of $7,500 to encourage these customers to complete the purchase in 2022, but it came too late to make any impact. Whatever sales lost in 2022 will probably be recovered in 2023.

b) Tesla found it difficult to arrange the logistics to export the vehicles from China to other countries. This was caused by the covid outbreak in China towards the end of the year, which caused a shortage of workers as many reported sick. This problem should probably be resolved in the 2023.

There is one negative point for Tesla. BYD appeared to be able to sell their vehicles in China (as can be seen from their record sales in December). NIO also reported record sales in that month.

So, it is likely that the lower demand is felt by Tesla in China, in spite of the problems in logistics.

To offset this challenge, Tesla had reduced the prices of its vehicles. This should make Tesla more competitive against the other manufacturers.

Tesla enjoys a large profit margin. Even if the prices are reduced, Tesla will still be able to sell their vehicles at a profit.

NIO operates at a loss in 2022. It is expected to make a loss in 2023 as well. NIO has a large debt of 82% of equity. The high interest rate will put pressure on NIO.

BYD is profitable, but has a PE ratio of 52 times. It is imported to improve its profits in 2023 and reduce its PE ration to 33 times. It debt is 23% of equity (which is low).

Tesla has a PE ratio of 39.6 times. The PE ratio is expected to fall to 24.3 in 2023. Its debt is 14% of equity. It has a cash hoard 0f $21.2 billion compared to debt of $5.9 billion.

At the current stock price, both Tesla and BYD are attractive for investment. I prefer Tesla because the stock price can increase by 50% from current level to put the fundamentals at a similar level to BYD.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1283

Wisdom of the Crowd - New Issues

1. Should India introduce surveillance to prevent terrorism in Kashmir?
2. Which self driving platform is likely to be the champion?

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WOTC - China economic growth in 2023

 Wisdom of the Crowd: 52% of respondents expect China to achieve strong economic growth (5% or higher) in 2023.

https://tklcloud.com/Crowd2/chart3.aspx?id=2791

Review of China Railway (0390.HK)

 I hold 400,000 shares of China Railway at an average cost of $3.67 HKD. The current price is $4.28, giving me a gain of $60,000 HKD.

The PE ratio is 3.15 times and the dividend yield is 5.57%. These indicators are attractive.

The forward PE ratio is 2.64 times. This suggest that the earnings for the current financial year will grow by 19%.

The stock trades in Hong Kong show a discount of 34% compared to the price in Shanghai.

Another positive factor, which will give a big boost to the stock is that the recent relaxation of covid restrictions in China will give a big boost to domestic travel within China. This will bring a big revenue boost to this stock.

All these factors are positive. I will buy an additional 200,000 shares.

Note - This is a personal opinion. I am not giving investment advice.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1282

Why is Tesla highly profitable?

 Many customers like Tesla for the following reasons:

a) It has leading battery technology
b) It has great software (to manage the operations) that can be updated "over the air"
c) It has an excellent design for the battery operated drive train

Many customer are willing to pay a premium price to own a Tesla.

There are many EV models from competitors that may have better specs than Tesla. Will Tesla maintain a lead over these competitors?

Many analysts overlook a key feature of Tesla - its manufacturing operation. It comprise of:

a) Tesla is able to produce a large volume of vehicles. For example, Tesla sold 1.3 million vehicles, compared to 122,000 for Nio, 112,000 for BYD and 95,000 for Volkswagon.

b) Tesla shows a healthy profit on its operations. Nio is still operating at a loss. The profit margin for BYD is quite low.

c) Tesla pays special attention to produce large volumes of vehicles at low unit cost. It offers a small number of models, but allows customers to select from a few options of each model. This allows them to achieve big economy of scale in production. The other manufacturers do not operate in this way.

While analysts and investors look at the specs of the models offered by the different manufacturers, few pay attention to the manufacturing method.

In my view, Tesla will continue to expand its sales significantly by offering competitive prices for its models and still maintain a high profit margin.

Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1281

Price and quality of durian

 There is a Chinese saying - the price that you pay reflects the quality of the goods.

This may be generally true, but it is not always the case. You may get the same quality, but you pay a higher price because the vendor knows that you are not familiar with the market. 

I quote this example. 

I inspected the price of the top grade durian (musang king, black thorn) sold in Ang Mo Kio town center. A stall sells 3 boxes for $50. Another sells 2 boxes for $50. The quality and quantity appears to be the same. The customer can pick the boxes. 

At a shop near my home (quite far away the town center), the price is $40 for each box. 

Of course, the price changes according to the season and the supply and demand in the market.

In the above example, I am quoting three prices for similar quality of durian being sold on the same day. 

I do not believe in paying more for the same product, in the blind belief that a higher price is for better quality.

I apply the same principle when I buy other products.
​​​​​​​
Tan Kin Lian
https://tklcloud.com/Feedback/feedback2.aspx?id=5599

WOTC - China relax covid restrictions

 Wisdom of the Crowd: 62% of the participants expect that after China relaxed its covid restrictions, only a few people will die and the population will achieve immunity.

https://tklcloud.com/Crowd2/chart3.aspx?id=2790

Alternative to the US dollar

 I am still studying which of the following is a better alternative to the US dollar:

a) Global currency
b) International RMB (or e-CNY) which is different from domestic RMB.

The global currency will need to be supervised by a few participating countries, e.g. BRICS.

The e-CNY will be managed by China, but it has to be done fairly and transparently to gain the confidence of other countries. It will be different from the domestic RMB because China wants to keep interest rate low to protect the China economy.

Each option has its advantages and disadvantages. There is no perfect solution.

A global currency will get the support of a few sponsoring countries and will be better trusted by other countries. But it may be difficult to get a few countries to agree on future policy and direction. 

The e-CNY can be managed easily, as it depends only on China. While some countries do not like to rely on China, they will probably find China to be more trustworthy than America. 

I have not decided which option is likely to work better. I shall think more about the choice.

I am confident that most countries want an alternative to the US dollar, to get away from the abuse of the US over its currency. Furthermore, the US dollar is likely to collapse due to the huge national debt.

Tan Kin Lian

https://tklcloud.com/Feedback/feedback2.aspx?id=5598

Wisdom of the Crowd - New Issues

1. Which system of government produces honest and capable leaders
2. Does universal suffrage (one man one vote) produce good leaders?

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WOTC - Vaccine from America

 Wisdom of the Crowd: 57% of respondents said that China should not use vaccine from America as America cannot be trusted.

https://tklcloud.com/Crowd2/chart3.aspx?id=2789

Wisdom of the Crowd - New Issues

1. Should a country impose a tariff to protect its domestic industry and jobs?
2. Is globalization good for all countries?
3. Is it a good policy to bring in workers from low cost countries?

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https://tklcloud.com/Crowd2/vote.aspx

Free and fair trade

 Here are the five principles of the World Trade Organization that seek to promote free and fair trade.

https://tklcloud.com/Feedback/feedback2.aspx?id=5594

WOTC - Estate duty

 Wisdom of the Crowd: 91% of respondents said that abolishing of estate duty does not help the poor. It helped the rich to avoid paying tax on inheritance.

https://tklcloud.com/Crowd2/chart3.aspx?id=2788

Donald Trump's tax returns

The US House of Representative obtained a court order for Donald Trump to turn over his personal tax returns.

After received the tax returns, the House released the tax returns to the media. Journalists discussed the tax returns extensively in reports published in the media.

I am troubled by the following points:

a) Donald Trump's tax returns are supposed to be private and confidential.

b) The House may have some legitimate reason to get the tax returns (e.g. to investigate if Donald Trump had abused his power as President while he was in office), but that power should not extend to release the confidential information to the media and the public.

c) Donald Trump should be tried by the court and not by journalist in the media.

d) If the House can act in this manner to Donald Trump, it will set a precedent for any future office bearer.

e) This tool can be used by a political party to attack office bearers from the opposing party for political motivation.

I find this practice to be immoral and vindictive. The situation is getting worse in America as the time goes by.

I do not like Donald Trump personally, but I think he should be fairly treated.

https://tklcloud.com/Feedback/feedback2.aspx?id=5590

Digital dollar (e-USD)

Some people are alarmed that America is introducing its CBDC, i.e. a digital dollar.

Why should they be alarmed?

They say that the digital dollar, i.e. e-USD, will have a different value from the current USD. The government will force everybody to convert their USD to e-USD at a lower conversion rate, say 10 USD to 1 e-USD. This is how the US government can reduce its large debt.

The e-USD will become a different currency from the USD.

I believe that this happened previously in countries that went through hyperinflation. The government printed a new currency and forced everyone to convert from the old currency to the new currency at a lower exchange rate.

I believe that the e-USD will be issued to promote digital payment. The fear that it will be used to devalue the current USD is overblown and alarmist.

Anyway, the USD is likely to devalue anyway due to the high national debt in America.

Tan Kin Lian
https://tklcloud.com/Feedback/feedback2.aspx?id=5589

Singapore policy changes - 2023

 These policy changes will take effect from 2023.

1. GST rate up by one percentage point
2. GST extended to imported low-value goods
3. Increased property tax rates
4. Lower childcare fees at government-supported pre-schools
5. Increased CPF contribution rates for those aged 55 to 70
6. Greater flexibility in transferring CPF savings
7. Mandatory rest days for migrant domestic workers
8. Quota for S Pass holders to be cut for certain sectors

https://www.straitstimes.com/singapore/higher-gst-lower-pre-school-fees-and-cpf-tweaks-8-policy-changes-from-jan-1

Wisdom of the Crowd - New Issues

 

1. Should the US House of Representatives released the tax return of Donald Trump?
2. Should the media discuss the tax returns of Donald Trump?

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WOTC - Acting prime minister

 Wisdom of the Crowd: 75% of the respondents said that one of the deputy PMs should be given the chance to be acting PM when the PM goes on leave, rather than rely on an experienced senior minister.

https://tklcloud.com/Crowd2/chart3.aspx?id=2786