IFAST IPO - What i like and dislike

To me, no matter how excellent a company's business model or financials is, it is extremely important to a minority shareholder to know what his or her exit strategy is. What's the use of investing in an excellent company where the returns are not shared meaningfully with the minority shareholder? Many people say that as long as the business is doing well, the company share price will follow suit. Yes, that happens and the minority shareholder can reap a return from the capital appreciation, BUT, stop and think about companies which don't give much or any dividends and yet,  it's price still increase.

Why should the share price increase when there is no or very little sharing of the profits when the company is doing very well? In my opinion, it is just sheer hope or speculation that Mr Market will buy it at a higher price OR the majority shareholder will sell the assets or company at a high price and capital be distributed back to the minority shareholders. In short, investing purely for capital appreciation is purely gambling, instead, cashflow(dividends) and its reinvestment and more cashflow and its reinvestment is what Albert Einstein called, the eighth wonder of the world. He who understands compounding earns it, he who doesn't, pays it. Thats why i launch http://sgminorityshareholders.blogspot.sg/

What i like about IFAST

This is a type of company which do not need much in terms of capital spending and super scalable. It is able to churn out free cash flow consistently, assuming it can ward off competition. Current competitors are DollarDex, Aviva Navigator,Poems platform,banks. 

What i really dislike about IFAST

They have no dividend policy and have only recommended a dividends of 60% of their net profit in 2015 and 4Q2014 only. Thereafter, it is really a gamble on whether any dividends will be paid as they did not promise nor recommend anything beyond 2015. See below print screen.Important data is underlined in RED.

At 95 cents, IPO price and using year 2013's net profit of $8,474,000 as a guide for the net profit of year 2015. (because this has been audited and is the most recent full year. Note that this is just an estimate, assumption,guide e.t.c).

Pay out as dividends in 2015 : 60% of $8,474,000 = $5,084,400

Post-IPO shares: 256,225,334

Dividend yield in 2015 ONLY: (5,084,400/256,225,334)*100% = 1.98%. 

This is not attractive to me and after 2015, who knows. 

Launch of SGMinorityShareholders

I have been investing for many years and feel dis-empowered as a minority shareholder. When i see majority shareholders who are usually directors enriching themselves with their high remuneration or cementing their control over their companies with relatives, while at the same time, giving little as dividends to the other shareholders, i feel helpless and the only avenue is to divest. I remember having invested in numerous companies which were subsequently delisted at a very low price due to a very low offer(relative to NAV)by the controlling shareholder. I wished i could just connect with the other shareholders to reject the offer but there was no such avenue.

What you will see for now:
The board of Directors remuneration will be compared with the total dividends paid out to all shareholders for each year.
The board of Directors remuneration will be compared with the net profit of the company during the year.

Should the total remuneration of the board of Director's be more than the total dividends paid out to all shareholders?
 I hope this site ( sgminorityshareholders.blogspot.sg) serves as a small stepping stone towards a greater voice for the Minority Shareholders.
Make use of this site to get updated, connect with other Minority Shareholders before AGMs, push for EGMS/Resolutions or agree on a fair offer price.

Oil Price and Interest Rates

Most people have been forecasting the interest rates to rise by 2015, including me. The chorus of selling bonds and REITS in anticipation of such a scenario have been deafening. The chorus of selling shares now in anticipation of tightening and interest rate rise has also been deafening.Having held off doing anything in the past 2 years , other then buying Super Group (yes, im still holding on) and buying and selling Jardine CC), i finally gave in to picking up some other shares, given the change in market conditions and also the uncomfortably high proportion of cash i hold.

The US Fed desires an about 2% inflation growth and a low unemployment rate. Currently, the inflation rate is low at about 1.7%. With oil price being DECIMATED, i do foresee a reduction in inflation rates and HENCE no pressure on the US Fed to increase the interest rates to squall any runaway inflation scenarios. The act of China lowering their interest rates and Europe, together with Japan, doing QE makes it even harder for the US Fed to raise interest rates which if they do, would increase their US dollar strength and hurt US employment.

I got this feeling that since QE, ultra low interest rates have not helped, now oil prices through shale oil production are being used to spur the economic engine by US. They do have a lot of tools.

Seems bullish for the general stock market.

Total Debt Servicing Ratio (TDSR) for Property Loans - a very pleasant surprise

I haven't been looking at properties for some time but i had a pleasant surprise when a friend told me that I could actually use my equity portfolio to 'increase' my gross monthly income so that i can borrow more for a property loan based on Total Debt Servicing Ratio (TDSR)

Examples of some eligible financial assets to 'increase' ones gross monthly income

Gold, unit trusts, structured deposits, stocks, debentures

If i pledge these financial assets to the bank, i could use 70% of its value to 'increase' my gross monthly income. However, if these are not pledged, i could only use 30% of its value.

Gross monthly income from eligible financial assets = (70% or 30% X eligible financial assets) divided by 48

Say for example, SGdividends happens to have $1 million worth of eligible financial assets.

Pledge to the bank

70% X $1 million = $700,000

'Increased' gross monthly income = $700,000/48 = $14,583.33

Do not pledge to the bank

30% X $1 million = $300,000

'Increased' gross monthly income = $300,000/48 = $6,250

Now, that's a lot of 'additional' gross monthly income. However, this is what the MAS guideline (MAS notice 645) allows and i have not verified how much more stringent the banks will be. 

Old Town Berhad and Super Group - different state of affairs

Super Group dropped another 3-4% on 15 May 2015. So i shout with GLEE, YES! Having bought at $2.95, why am i happy when it closed at $2.84 the next day? Shouldn't i be a bit affected  if not emotional? Actually, i exaggerate and i am not happy but i am definitely not emotional and i stand ready to buy. 

Firstly, looking at the number of short sellers,

15 May 2015 - Volume of  transacted shorts 630,685

14 May 2015 - Volume of transacted shorts 421,000

12 May 2015 - Volume of transacted shorts 90,000

09 May 2015 - Volume of transacted shorts 70,000

08 May 2015 - Volume of transacted shorts 173,000

It is obvious that this price plunge is due to people playing the market and not due to the long term fundamentals of the company.

Secondly, my partner- in -crime alerted me to a somewhat opposite state of affairs across the Straits of Malacca in our friendly neighbourhood of Malaysia, Truly Asia. Old Town Berhad's shares has been acquired by Artisan International Small Cap Fund ,Matthew International Capital Management and Mawer Investment management pretty aggressively since March 2014. And Old Town Berhad is a direct competitor of Super Group especially after Super Group ventured into the cafe business under the brand of Owl Cafe (link.).( The other one is VizBranz but it has been taken private some years ago and it doesn't have cafes).

Old Town doesn't have better ratios , more of comparable ratios to Super, if not lousier than Super Group slightly.(Bloomberg Mobile) So, why are funds buying into Old Town? A logical answers would be there must be some value in this FMCG space.

Super Group

P/E - 16.55

P/B - 3.29

P/S - 2.88

Div yield-3.17%

Old Town Berhad

P/E - 19.29

P/B-3.22

P/S-2.58

Div yield - 1.44%

I am taking a risk, yes. Let's wait to see if there is any announcement over the weekend of any news.Not too long ago (Jan 2014), Bloomberg ran an article of possible acquisition of Super by Suntory or Kirin. , with many analysts reports placing target prices of $4-6. Now, they are reversing their target prices, after the FACT. Really lame. Maria, get me a cup of Nanyang White Coffee. You give me more value than these analysts!