Sunday, April 8, 2012

InvestFair Singapore 2012

I was there yesterday from 10 a.m until 5p.m and attended 4 free seminars in between. I have to say it was quite a fruitful day given that I did not spend a single cent. At the start, there's this girl that asked me if I wanted to do a survey in exchange for a $60 voucher for the seminar. I rejected her as I don't see how useful these paid seminars are supposed to be since there are mostly about trading...

The first talk that I attended was "Investing in Straits Times Index" by Chris Tse from FTSE Group and Geoff Howie from SGX. It's a good primer on the STI where I get to understand how the index is being constructed and how it changes every quarter. I had a chat with Chris Tse after the talk was over. The first question I asked was if FTSE Group is listed (given that I see some potential in it) and well it is in fact a subsidiary of the London Stock Exchange. Currently, STI is overweight on the financial sector with a 25% weightage but this might be reduced the next quarter should the DBS- Danamon deal be successful. This is because other than market capitalisation, the free float plays a huge role in deciding the weightage. As for why the sub-sectors are not available for investing, the reason is simply that there's not enough interest and participation in ETFs from Singapore.

The next talk was "Experiencing Kingsmen" by Andrew Cheng, the group general manager of Kingsmen Creative. He did a presentation on the various segments of their business and I was impressed by the number of customers they have for trade shows and retail design. He also confirms one of my worries that Kingsmen     will face a problem in scaling its business upward. Understanding that there's not enough creative director and designer for interior design industry,  I posed a question asking if the inability to attract sufficient quantity of quality designer and creative director will have an impact on their growth potential. To this, he admitted that they did face the problem of hiring talented personnel such that sometimes they have to avoid taking on new projects. They have tried to mitigate it by hiring from aboard too. Of course, if you view it from another angle, it does shows prudence and owner's mentality of the management. He said that they have to make sure that every project is well-executed since this will have an impact on their ability to secure future projects. So if you are expecting that the company is going to be able to grow very fast, you can forget about this stock. However, with the ongoing growing retail and MICE scene coupled with the management's prudence, this could be a winner in the long run.

The third I attended was "Leverage on the Practicability of Dividend Investing" by a product manager from one of the local brokerage. I thought it was supposed to be on how to do dividend investing, but at the end I realised that it was about how to use leverage to maximise dividend earning. What I feel is that a 10% or 20% leverage can help to increase the return on the basis that you choose a solid company whose profitability and free cash flow is predictable. However, the example that he gave made me worry about the rest of the audiences. A normal person with $30k seeking for dividend, put his money into SPH for a dividend yield of 6%. If he were to use the share financing option (3.5% interest pa for STI component stock) by leveraging up to $100k, his dividend yield will be 13%. Yes, the leveraged dividend yield looks awesome, but for a 230% leverage, you are obviously exposing yourself to significant risk including the potential loss of all your capital. In this case, all it takes will be for SPH to fall by 30% (easily attainable even for SPH in a fallen bull market like 2008 GFC) and I will say good luck to you.

The last one was "How I Become Financially Free after 2 Crisis" by Ken Chee, CEO of 8 Investment. He seemed to be the only one in Singapore touting a Value Investing Program so I decided to have a look at it. Honestly, I have to say his program is pretty good for beginners and anyone who wanted to learn more about Value Investing can consider it given that the cost is only around $400 ($200 if you sign up on the spot) which is much cheaper than many other courses out there. (That was only for the foundation course, the actual MIP is $3495, that's definitely going to be one of the most expensive I have seen so far other than a $10k course on technical analysis) Another benefit will be the quarterly networking sessions which I think might be helpful in generating new investment ideas since fantastic companies are very rare to come by. What I think is that it is more like having a mentor while reading Philip Fisher, Benjamin Graham, Peter Lynch, Mary Buffett's classics. For e.g. grouping them into 6 types of companies is very similar to Peter Lynch's classification, while finding the right business model and management (2 of the 3R) are like Buffettology and "Common Stock, Uncommon Profit".

After the end of the talk, he promised to share with everyone 2 value stocks and since gems are hard to find, I  decided to join him in the booth. The moment he showed the LTA's letter for mandatory inspection, I knew he was going to talk about VICOM. However, I do not like the way he presented it and I felt that the 100+ people there are going to be blindly considering buying it now. He concentrated fully on the vehicle inspection business and barely touched on SETSCO calling it a building inspection service which just represents a tiny portion of SETSCO. He went on his pitch about how vehicle inspection is mandatory and VICOM's monopoly position and then showed its revenue and profit growth which lead to its share price increasing. He did not realise that it was due to the dropping de-registration rate that led to the increase in profits. It was also the management's ability to grow and develop SETSCO that VICOM is what it is currently. The second company that he chose was OKP, but I was late for it and only managed to catch him selling his program at the end.

Indeed, I learnt the most from the first 2 seminars than the latter 2. I also cannot help to feel that I am very blessed and lucky to have been shown the proper direction. Many retail investors are probably being "misled " into going for programs or taught improper methods of investing like the leveraged dividend investing. Even for the value investing program, the "misleading" part is done in the testimonial where people are getting 33%, 67% ROI to winning equivalent of a 5 room HDB. In case you wonder how it's achieved when Buffett is probably only earning 20%, they were all invested in 2009 which was the lowest point after the 2008 GFC. Neither do I believe that he becomes a millionaire solely by investing, a great portion of the income should have come from his brand consultancy company. While I didn't really attend Adam Khoo's seminar, hearing him for a few minutes and I knew that this guy was a great salesman and speaker. After the talk, I supposed there's at least 100 that went to flood the booth to sign up for the course. Neither is it really that evil since he's talking about index investing. However, do we really need to pay money for people to convince us to do index investing?

Next week I will be doing a 2-part review of VICOM for FY 2011 before the AGM on 26th April.

(I have no vested interest with any of the speakers and program above)


  1. Leverage can incur substantial loss when share price falls. It is not wise to use leverage when we are at market peak now.

    1. indeed, that's why i feel so sad for the folk out there, especially the elderly and their retirement fund. Well, the brokerage gets to enjoy a 3.5%-6.5% interest p.a without suffering any losses other than if you default on your payment