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Sunday, 25 April 2010

I bought Mermaid Maritime, United Envirotech and Aspial

No longer had the luxury of time to blog on each and every transaction within days, I might as well consolidate them into a single article and post them when I had the time. Anyway, it will still serve my intended purpose to track what I do over the years and still garner some feedback, though not as timely as I hope to. But life is all about compromise, isn't it?

New addition to my portfolio since the MacArthurCook Industrial REIT error

  1. Mermaid Maritime on 19 January 2010
  2. United Envirotech Ltd on 22 March 2010
  3. Aspial 22 April 20
Qualitative Reasons behind Actions

1. Mermaid Maritime

Despite seemingly increased effort to cut dependence on oil by going into other forms of energy or greater 'green' efforts on energy conservation, I doubt the demand for oil will be drop in the next 10 years, enough for me to double my returns on all my oil related businesses. After SPC, CH Offshore and KS Energy, Mermaid Maritime is my latest acquisition in this business. Other than SPC, all of them are involved in support related services in the Oil & Gas industry. For Mermaid Maritime, they are primarily involved in tender rig drilling and sub-sea engineering. What attracted me was their seeminly good financial health (cash and equivalent slightly exceeds outstanding debt) and actually traded below net tangible assets.

2. United EnviroTech

If I'm crazy about oil & gas, I think I as crazy over water too, the other critical resource. I actually got into Dayen Environmental Ltd and got out immediately after I discovered a can of worms. The problem with me was that until I'm am vested into something, I could not find the energy to drill deep enough beyond the business nature, prospects and reported financial. When I knew Dayen actually had disclosure issues (one of them relates to reporting profits and projects clinched but not losses incurred), I got out as soon as I can and fortunately market irrationality allow me even to exit with some profit!

Anyway, back to United Envirotech Ltd (UEL), though registered in Singapore, they derived their revenue predominantly from their business in China. The Chairman and CEO, Dr Lin Yucheng was recruited by the Singapore Economic Development Board in 1990 to conduct research and development work in SISIR (Singapore Institute of Standards and Industrial Research), Singapore. He subsequently set up a subsidiary under the Singapore Productivity and Standards Board (PSB)- formed from the merger of National Productivity Board (NPB) and SISIR. The company was involved in environmental, health and safety standards consultancy and environmental engineering. This will later become a subsidiary of UEL.

Now, UEL is involved primarily in turnkey projects or building and running of waste water treatment plants in China. The latter provides increasing amount of recurring income and stablises their profitability. One interesting thing about UEL is that it is in almost net cash, not really because they are that great in utilising internal resources for building projects but always raising equity when they need the cash, as the recent two placements show. If I am a major shareholder, I won't be happy with the dilution. But as a small shareholder, I am pretty fine so long as I still get my returns.

3. Aspial

Aspial had 3 business, jewellery via Lee Hwa, Gold Heart and Citigems; Pawn brokerage services via Maxi-Cash and property developement. It is the 3rd business that attracted me to this company. By now, the property bubble in Singapore is already too obvious to ignore. If so, why do I still choose to buy Aspial? The reason being that Aspial seems to buy only freehold land for development and was 'fortunate' enough to buy most land at relatively low price before the surge in 2H FY09, though it could be much cheaper even earlier after the global financial crisis erupted in FY08. Anyway, the way I read it was that if the bubble continues, they can develope properties to sell at a handsome profit, else, they'll just have to sit on their land, anyway, freehold land don't depreciates.


Wow, that's 4 transactions squeezed into one article. Hopefully as my baby girl grows up, I can still find the time to blog, though my primary 'duty' is still to spend as much time as I can with my beloved baby girl. Once I can get her a little sister or brother, hopefully I can outsourced the attention to themselves, mutual perpetual attention supply via playing, quarreling or fighting ;)