SPAC Boom! (Part 5) :BLACK SWAN in SPAC?

Its been a while that I've stop blogging. Some said I've run away causes losing money until trousers drop, some said I'm talking rubbish here and some said I've made my millions. Anyway, non of the above is true but I do wish the millionaire thingy can come true. Haha.. I've been busy with some stuff and I've joined Grand Pine to make myself even much more better in stock market and they are proven with their track record. You can contact me if you would like to join or attend their seminars.

Let's get back to the title. Recently, there are lots of "Hoo Haa" for SPACs and formal SPAC.

1st) The SC had tighthen the rules of the new SPACs listings.

2nd) The Hibiscus which is formerly a SPAC had failed to get oil for the 1st drill in OMAN. This is the Black Swan that I meant.

These 2 looks like a bad news to the SPAC investors. 1st of all, looking at the rule tighthening by SC, I would say it is good and it can make our SPAC here better than the others that were being listed in other country. Why do I say so? This is because the tighthening of the rules can make sure the investors are well protected. You can see it through the changes.

1st The management team is not allowed to touch the money from the trust for their salary. Isn't this obvious enough to protect the investors? This will ensure the management really work on the deal and not slacking in order to get QA ASAP!

2nd The discount of the initial investors should not be lower than 40% of the IPO price. This is also good for those late investors like you and me! At least we are making sure that they don't get crazy profit for doing nothing! Anyway, it will be even better if they could even lower down the discount.

For more benefits, U can look into this link
http://www.fz.com/content/sc-fine-tunes-spac-rules 

On the other hand, to those who are pessimistic of the stock due to the failiar in foreign country. I think it would be different case as we are having a better set of rules that really protect us after SC learnt from those failiar. To those who don't buy this concept, due to no core business, I would say it is not bad to buy a company with tonnes of cash which is going to buy new business that could act as a catalyst for the share price.

The another issue is more to the Hibiscus case where some of my clients keep telling me that they SPAC is dangerous! This is because they afraid CLIQ or SONA might not be able to hit oil just like what HIBISCUS did! Well they might be right in some extent but what I would say is, you will have to look at the company's plan before making such a judgement!

1st) The Hibiscus has been slated to be a E&P player which is to explore and produce. This can be found easily online through those online news. (Exploring Asset is the most risky assets according to SONA's management)
http://www.theborneopost.com/2011/06/30/hibiscus-sets-precedence-in-new-listing-category-on-bursa-latest/
This means the company gonna explore 1st and try their luck whether got oil alnot. When they strike oil, they strike the pot and vice versa. So the risk is like what happened recently.

Anyhow, it is worth to take note that the investment in Oman is just about 35% of their proceeds they got from IPO and its not all their money! Hence, will this be a chance to buy at the cheap side? Don't forget they have the 2nd chance which is the 2nd drill after the recent failed attempt.
http://www.theedgemalaysia.com/highlights/195258-hibiscus-to-venture-into-oil-and-gas-eap.html

I'm a person who believe that there are insiders and  in the market, pls take note that is only what I believe and it might not be true. Will it be the insiders had sold it when they knew there are oil in other place and push it up ? And press it down for ticket again by telling u no oil were being found? And push it up again when there are oil in 2nd drill? Well.. No one knows except the one who plotted this. Hahaha.. I'm just making stories here, please don't believe the joke and it's not true.

2nd) CLIQ Energy (My darling, I mean the stock not the guy in the picture)
According to the game plan of CLIQ, they plan to acquire discovered O&G where Brownfield will be accounted for 75% of their IPO proceeds while 25% will be the Greenfield asset which is still under the exploration.
http://www.theedgemalaysia.com/business-news/233853-ipo-cliq-energy-to-own-more-brownfield-assets.html

Apparently, they are having lower risk isn't it?

3rd) SONA Petroleum

According to the press release before listing
"Hadian cites the oilfields being hived off by Newfield and Hess as the sort of assets that have become available in recent times.
Sona Petroleum has said it is interested in buying smaller fields in shallow waters with depths of not more than 120m. It believes these assets are abundant in oil-producing regions such as the Middle East, Africa and Asia.
While it is prepared to invest in all three lifecycles of an oilfield, Hadian says the firm will prioritise assets that are producing as a jump-off point before venturing into earlier-stage wells, which naturally come with higher risk and capital cost.
Fields with reserves of between 5 million and 30 million barrels, and production of 2,000-5,000 barrels per day, are preferred, he adds.
“We intend to acquire a producing asset first, which is more likely to have steady cash flow, a shorter lead time and lower risk because it is in production," Hadian says.
"With the cash we will replenish our reserves by seeking out development assets. And for future growth, we will look to acquire exploration assets, the most risky of the three."

http://www.thestar.com.my/Business/Business-News/2013/07/06/Sona-Petroleum-stokes-interest.aspx/

Can U see the differences now? Hibiscus focusing on becoming a E&P player while CLIQ wanted to be more secure by getting Brownfield to get some income 1st and same goes to SONA Definitely having some asset that generates income is much more safer!

After the price tumble for Hibiscus the Black Swan in SPAC Boom, I've noticed that the price for the other SPACs especially CLIQ had came down quite a bit and I will take it as a black swan event in this industry and I've bought more CLIQ at this level and gone all in. Is it a right thing to do? I don't know but I believe so.

Last but not least, there are lots of investors in the forum are saying that the management is useless and they are taking way too long for the QA. Undeniably that I prefer the QA to happen ASAP but I do also understands that buying Oilfield especially brownfield is not an easy job like buying vegetable. It's even harder when u wanted to buy something good and with reasonable pricing. So I would say, if you want to buy SPAC then buy it only if u can wait for 2 and a half years or else you can choose other investment which is fast enough.

Investment take times, and I can't find any investment that can gives u instant return or guarantee return. If there are, thats mean there must be something wrong! This is because most of them are SKIM CEPAT KAYA! The only investment that can gives instant result which I can think of is only Casino! Let's go GENTING!!!

In short, Buy SPACS only if U can wait! HAHA... Anyhow, I think they are close to QA already. Lets not miss the boat! (only if you can wait!) On the other hand, lots of retailers loves to ask about Target Price. Personally I think RM1.25 wouldn't be too hard for CLIQ  while RM0.8 wouldn't be hard for SONA.Haha.. This TP is base on gut feeling and has no proper way of calculation. Let's see whether can they hit that price after their QA! Of course, I do believe they can move even higher than what I mentioned above as I need to put a lower price out here to make my words come true! Good Luck!!!

HAPPY NEW YEAR in advance and MAY US HUAT HUAT HUAT in the year of 2014!!! 

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions 

Is REITS still a good asset or safe asset to invest now? (Part 2)

In the previous post, I mentioned about the retailers and the FD as well as the treasury bond yield. In this post, which is the most crucial part as I will talk about the relation of treasury bond yield and the Institutional investors. 

As What I mentioned in the previous post, the 10 year treasury bond yield had rose since May and now at the point of 2.88% while the 10 year Malaysian Govertment Securities yield is now standing at 3.89% which rose from 3.11% on 10th of May 2013.

2nd , I would like to talk about the instrument where the Institutional can play with. Why is Goverment paper is important to the investors? This is because its almost a risk free investment as it is being guaranteed by the goverment and the only risk is the govermnt default on it. On the other hand, this instrument is only available to the sophisticated investors, which is the investor must have at least RM2 million net worth to play this game.

In order to let most of the retailers understand about the instrument, I use FD as something similar which helps to let the retailers understand more.

Now we talk about REITs. REITs is an investment that gives us return from the rental of the real estate. Is it risk free? Its almost a risk free but not totally risk free as they might have accidents or unforseen events. As we know, they usually pay 90% of their income as dividend but be mindful of the drop of income too. Thats 1 of the risk.

So what does REITs has to do with the Treasury rate? This is important as REITs and Treasury bond are both investment that guarantees dividend yield and return. As a result of that, these 2 can be said as the closest competitor for fund managers to invest in.

Why? Imagine, you are a fund manager and the guaranteed yield of MGS or treasury is about 4% while the REITS will be paying 6.4% yield. With the bumpy road ahead, which investment will you put more in? You might still say that you will go for REITs right?

Undeniably, REITs stil offer a better return but don't forget its not risk free, and the fund managers might choose invetment that is risk free to make sure they wont lose their money. There are some evidend which I can find from local market and this might convince you.

As we know, the US 10 years treasury yield rose on May according to the chart.

 According to the 10 years US Treasury Bond chart, the yield started to rose on the begining of May which is even earlier than the announcement of Ben Bernanke. This shows that even in US also has insider trading.

 

This is the yield chart of MGS. This is the best that I can find but too bad that it doesn't show the month. To get more details of the yield, please go to the link below. 

http://www.bnm.gov.my/index.php?tpl=govtsecuritiesyield

In order to proof that my theory is right, I will show you the changes of the share prices of REITs.

 

The Chart above is Star Hill Reits where you can see the share price started to fall on June.

 

The chart shows that the UOA started to come down since end of July.

 The IGB Reits had started to drop since May, which best represent the theory

The Sunreits was dipping since May too!

CMMT was dipping on MAY too!

Hektar started to dip on may too!

 

Amfirst started to drop on May too!

 

Pavilion Reits started to dip on May too!

 

Axis Reits started to drop on mid June.

Why do most of the price for REITS drop on MAY? Is it coincidence? NO!!! It's because of the rising yield! This does not only happen in MALAYSIA but SG too!

 

SUNTEC REITS in SG, fell on MAY too!

All of the dropping in prices had shows that the demand in REITs was getting lesser as Bond yields rate are rising. This was due to the fund had shifted from REITs to Bond which is risk free and now giving a higher yield.

Still not convince?

Lets look at the formula of yield.

As we can see, when we invest in Risk free instrument in the past, it pay us 3.11% on May and the REITs were paying 6.4%. In order to make us invest in REITS, the REITs has to pay a premium of 3.29% for us to invest in it and lets assume thats the return that required by the investors to take the risk in REITS.

As our Malaysian Goverment 10 years treasury bill is now paying 3.89% , so to attract investors to invest on REITS, thats mean they have to pay a premium of 3.29% + 3.89% of the risk free rate which equals to 7.18% right?

Can the Reits afford to pay more for divident? Lets say in the past, a REITs was paying 6.4 cents per annum and the price is RM1.00 which means it has a dividend yield of 6.4%. Due to the rental was a fix income and couldn't adjust as u like. So how could you makes your yield to become 7.18%?

As a result, the share price will have to adjust to 0.89 cents to give a 7.18% yield where the payout of dividend remain 6.4 cents. So do U think the price of REITs dropping is not related to the rising yeield of treasury bill?

You may say that the capital flight of foreign funds might play a big role on the price drop but certainly, the rises of yield does play an important role too!

Anyway, seems like I had debunk that REITs is not a 100% safe investment isn't it? To the readers that thinking of buying REITs, It will be a good buy if U r satisfy with the yield that they are giving right now and you are able to hold until the end of the day without being scare off by the falling price, or else you might have to think again whether is it worth to invest in REITs. 

Although it's still unclear that whether is FED going to tapper the QE or not on this coming FOMC meeting but it's certain that they will tapper it sooner or later as well as our OPR and even BLR. As a result, the yield is going to raise in the future and this going to dampen the REITs market. To Hold ? make sure you are able to average down in future. To sell? Is this a good price? How low will it go? It's always a million dollar question. 

To the reader who think that this is a shallow assessment, do u still think that this is shallow after looking at all the drop in price and all the relationship of the matters above? Appreciate if you could share me your view after reading this. Thanks!

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions 

 

Is REITS still a good asset or safe asset to invest now? (Part 1)

In the past, we were being told that REITS is a very conservative instrument and very defensive as it is giving out its earning as dividend, but is REITS that good actually? How bout the capital appreciation as well as capital protection? In this article, I would like to share some of my thoughts regarding this instrument. 

To evaluate whether is it a right investment now, we will have to look at the few factors that will causes the price movement of the REITS.

1st Interest rate

2^nd Occupancy rate

3rd The demand on Reits 
4th Increase in the Property Value

Looking at the factors above, I believe that the 1^st and 2^nd factor is the issue that moves the demand of Reits, while the 4th factor will be the growth of economy.

Looking at all the factors above, I think Interest rate is what we should concern the most for the current situation.
As we know, Reits is where we invest to get return which is generated by the rental income of the Real Estate. As long as the Real Estate is able to generate income then we are able to get return in dividend. In order to generate more income, the management will always try to utilize their space and rent it out which we can saw the renovation done by Mid Valley where the food court had now turned into a more high class area which will generate higher return.

The issue here right now is, how much rental income can they increase in a year? Lets say they are able to increase 5% per year which is really fantastic to me and its not easy to do so.

As the rental income is not easy to grow by every year, lets assume that they didn’t drop either which will make u have a clearer picture later. 

Now we will put our attention on Interest rate. 

After Bernanke speech regarding QE tappering, US 10 years treasury bill price had drop which also mean that the interest had gone up. (Treasury bill is the instrument for them to control the interest rate)

 

(Source:  http://blouinnews.com/66006/story/us-bond-yields-hit-2-year-high)

On the other hand, Our Malaysian Govertment 10 years Securities rate had shot up from 3.48% (03/01/2013) to 3.98% (02/09/2013). 
(Source: http://www.bnm.gov.my/index.php?tpl=489&sdate=2013-09-02&lang= )

(Source: http://www.tradingeconomics.com/malaysia/government-bond-yield )

On 29 August 2013, Indonesia had rose their reference rate by 0.5% from 6.5% to 7%  as well as their deposit facility rate by 0.5% to 5.25% in order to stabilize their currency which I couldn't really understand much why are they doing so when they are facing high "cost push" inflation as well as the step will jeopardising their economy growth. 
( Source: http://online.wsj.com/article/SB10001424127887323324904579042590447253328.html )

After looking at all the example that I showed above, my question is when will BNM increase our OPR? 
It's understand that our Governor saying that the interest rate is good enough to bolster our economy growth, but this statement only indicates that the she will not reduce the interest rate. She won't reduce interest rate doesn't mean that she will not rise it! According to most of the economist in Malaysia, they believe BNM will increase the OPR by 0.25% earliest by next year, but I would say capital flight is a wild card to the BNM which might causes them to raise it earlier just like what our neighbour did.

How does the interest rate affect the REITS?

Imagine, you have RM10,000 and you are a conservative investor. You are looking at some instrument that is safe and it will be best if its capital guarantee as you are conservative. In the past, the REITs averagely paying 6.4% return per annum according to http://www.thestar.com.my/Business/Business-News/2013/04/23/Malaysian-REITs-losing-lustre.aspx. In order to get the 6.4% return, you will have to take some risk such as such capital depreciation from the investment, risk of lower income in future and risk of disaster. There are lots of risk where you will have to bear in order get a return of 6.4%.

Looking at the Fix Deposit rate in Malaysia, you can get as good as 4.01% interest rate for 12 months Fix Deposit where your money is being guaranteed by PIDM up til RM250,000. The only risk that I can forsee here is Inflation Risk. This 4.01% is according to the research done by savemoney.my. 

As our Overnight Policy Rate (OPR) is just about 3.0% now and is anticipated to increase in near future which will causes the rise in Base Lending Rate (BLR). If such case happen, the bank will have more room to increase their Fix Deposit rate in order to attract more funds to park in their vault while maintaining their profit margin. 

If the Fix deposit is increase up til 4.25% per annum, will you still place your bet on REITS which gives you about 6.4% by taking more risk? Will you shift your money from REITs to FD? When you feels like switching your bet from REITs to FD, hence you will create a situation where Supply is more than Demand for REITS and you will have to sell it cheaper in order to get back your money!

On the other hand, those who wanted to invest in REITs will demand a higher return rate such as 8% per annum for taking the risk of REITs. 
For an example, a REITs is now trading at RM1.00 while paying RM0.06 per annum which is about 6% per annum. In order to get 8% return, we will only buy the Reits when it is trading at RM0.75. 
Why? This is because with the dividend of RM0.06, you will only get 8% return by buying the REITs at RM0.75.

As a result, do you think it is still a good buy now? Unless you are happy with the return rate given by the REITs now and able to hold it for a long period, or else I don't think it is a good bet in Malaysia.

 Other than the effect of the hike in interest rate being discussed above, there are still some other factors which will affect the price of REITs. Please stay tune for the the 2nd part. Thanks for reading!

Appreciate if you could share your thoughts by dropping your comment down here. 

 Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

SPAC Boom! (Part 4) : How worst could it be?

1st QE tappering and foreign fund flight
2nd South East Asia currency crisis???
3rd US to hit Debt Ceiling latest by Mid of October 2013
4th US may shoot missiles to Syria as soon as this Thursday

Has all the issues above scares you???

Will the market fall somemore? What is the best time to buy??? What is the best price to get blue chips? It's really a tough question as the market is now very shaky and we are not sure whether which blue chips will be hit down if the crisis really comes.

As a believer of SPAC, I will still tell you that the SPAC is a best buy at this juncture. Why???

1st SPAC always have 90% of their IPO proceeds with their trustee as long as they haven't purchase any assets. 

According to the theory above, we can see that CLIQ and SONA still has 90% of their cash in the "vault" as long as they haven't purchase any asset. Which mean CLIQ has RM0.675 in the bank while SONA has RM0.45 in the bank.

CLIQ
Looking at their closing price today, where CLIQ close at RM0.62. We can say that buying CLIQ now is equals to using RM0.62 to buy a share that has RM0.675 cash in it. Is this value investment? Is it worth?
On the other hand, if the SPAC fails to acquire any asset within 3 years which is 10 April 2016 that means they are going to repay you all the money inculde the interest that the money earn for 3 years.

Imagine that the interest rate that being earn by that amount of money is just 2% per annum.
 From 10 April 2013 til 10 April 2014, your money become RM0.6885 (RM0.675*1.02).
 From 10 April 2014 til 10 April 2015, your money become RM0.702227 (RM0.6885*1.02).
 From 10 April 2015 til 10 April 2016, your money become RM0.716315 (RM0.702227*1.02).

The gain that you make from this investment will be
 RM0.716 - RM0.62 = RM0.096 or 0.096/0.62 = 15.48%. 15.48% in 3 years, which will be averagely 5% a year. Good investment?

SONA
Looking at their closing price today, where SONA close at RM0.39. We can say that buying SONA now is equals to using RM0.39 to buy a share that has RM0.45 cash in it. Is this value investment? Is it worth?
On the other hand, if the SPAC fails to acquire any asset within 3 years which is 30 July 2016 that means they are going to repay you all the money inculde the interest that the money earn for 3 years.

Imagine that the interest rate that being earn by that amount of money is just 2% per annum.
 From 30 July 2013 til 30 July 2014, your money become RM0.459 (RM0.45*1.02).
 From 30 July 2014 til 30 July2015, your money become RM0.46818 (RM0.459*1.02).
 From 30 July 2015 til 30 July 2016, your money become RM0.47754 (RM0.46818*1.02).

The gain that you make from this investment will be
 RM0.47754 - RM0.39 = RM0.08754 or 0.08754/0.39 = 22.45%. 22.45% in 3 years, which will be averagely 7% a year. Good investment?

According to the simple calculations above, Sona is definitely a good buy compare to CLIQ 
Well, that was assuming that they failed to acquire any assets. Do U think they will failed to do so? As we know, CLIQ is going for assets that is close to production and its about 4 months since listed. I believe they will announce their target after the market had calm down as thats a better time and much more easier for them to push the price instead of now, but will U be able to buy at a cheaper price? or they will rebound soon? These are really hard question to tell, if not, I would have already asked you to sell everything before the sell down. LoL..

HOW WORST COULD IT BE? 

Looking at the situation now, its more like a panic sell down by the retailers after getting affected by the Foreign capital flight. Its normal for RM to drop as the foreign funds flowing out as they have to change it back to USD to repay their debt for carry trade. They can't pay it with RM right?

Good Luck and Huat ah! 

 Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

Is financial crisis around the corner?

FBMKLCI Down by 32.94 points or 1.85% today while Thailand fell about 27.62 points or 1.98%, Indonesia fell 138.53 points or 3.21% in a single day. Indonesia had droped about 524.74 points or 11.2% from 15 august 2013 while Thailand drop about 89.77 points or 6.2%. Malaysia drop 48.39 points or 2.7% since 14 August 2013.

Looking at the big drop, lots of investors has started to worried whether should they sell? Is this just the beginning? Is there any big crisis around the corner?

Personally, I don't think that this is a very big deal and I would advice to take this opportunity to buy good stock on weakness. Why?

1st, the market was dropping not due to our economy is having any big issue but it was due to the FED tappering! 

As we know, the QE had press down the cost of fund in America, where we can see that their 10 years treasury rate was just about 1.6%. This was due to the US govt keep buying back the treasury which is creating more demand just to press down their interest rate for the economy to move back again. This is because the company will have cheap money to do business and those with jobs can buy house again with such a low interest rate.

As the funds are cheap, investors will take the opportunity to do the "carry trade" where they borrow the cheap fund to invest in other places. We can say that they abuse what the FED plan to do but this is human isn't it? After getting the cheap money, they invested in SE Asia and some emerging markets which causes them to rose since last year.

Until somewhere around May, there are concern about FED is going to tapper QE if the unemployment rates turn better and better inflation rate and this has create some unrest in the market. Why? As the FED is tappering, thats mean they are not going to create as much demand as before for the Treasury. This will causes the price of the Treasury to fall while having a higher yield. What will you do when your cost of capital rose? You will try to repay as soon as possible right? That explained why do the market fell so badly since Bernanke talk about tappering.  Anyway, QE tappering is actually telling us that the consumer giant is about to awake again!

IT's obvious that its the foreign funds are running away from the market due to the higher cost of funds, and this can be proven by the weakening ringgit towards other currencies. This was due to the foreigners need to get back USD in order to go back their country ( they won't use RM in US right? LOL)

Anyhow, we can see that our GDP as well as Thailand GDP is not doing well for last and this quarter. Yes, this will be an issue to us as economy is not doing well. Our GDP will not doing well due to the fall of the CPO price which contributes a lot to our GDP. Even this might be a bad news for us but I think it wouldn't be worst as long as our big brother US awaken!

When US awaken, the demand had came back and we will start to export item again and economy will still grow.

In short, grab some good stock when U think the valuation and pricing is right at this falling chance. Remember, buying stock is to invest and not to gamble. 

Personally, CLIQ and SONA will still be my top call as their mother share is real safe for now. U have a 90% cash back guarantee if they failed to purchase anything. If they purchase something and have good prospect, then there is only 1 direction to go. On the other hand, maybe U should avoid property stock as the rising interest will causes lower demand for the housing industry. I'm still positive with medium term.  Hope that I'm right.

Good Luck and Huat ah! 

 Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

SPAC Boom! (Part 3) Different Stages of SPAC

 
Would like to add up some point that I've ommited in Part 2.

After mentioning about the risk of investing is great, its important to know that the risk of investing in the mother shares of SPAC was just about 10% of the IPO price. This is because of the 90% will be given back if the SPAC failed to acquire any assets in 3 years time. Only warrant holder will suffer the most if they failed to acquire as the warrant holder are not allowed to convert to mother shares if they SPAC failed to make any acquisition.

Different Stages of SPAC
 There are 5 different stages of SPAC for small fish like you and me. Each stage provides U a different theme as well as the return.

 The Initial Stage
This is the stage where the SPAC looking for money and this is the IPO Stage.

Looking at the past, the very 1st  SPAC in Malaysia wasn't really doing well at this stage as Hibiscus was only able to get a total of RM235 million as initially looking for about RM300 million from the IPO. This was due to the lack of knowledge from the Investors as this was the 1st SPAC and the investors are too afraid of new thing and adopt "wait and see" strategy.
(quoted from http://www.theedgemalaysia.com/business-news/184264-hibiscus-to-test-investors-reception-for-spac.html)

2nd SPAC CLIQ ENERGY wasn't too bad. They targeted RM150million to RM500million but gets only RM363.5 million.
(quoted from http://www.thestar.com.my/Business/Business-News/2013/07/22/cliq-energy.aspx)

3rd SPAC SONA Petroleum currently the best among the all as the company had successfully raised RM550 million from IPO just like what they targeted.
(quoted from http://www.theborneopost.com/2013/07/31/sona-petroleum-makes-successful-debut-on-bursa-malaysia/)

The Asset hunting Stage
This is the stage where SPAC is loaded with $$ and now its time to lookfor good asset to acquire. This is 1 of the stage that able to create Castle in the air for the investors or some will call it the Price to Dream. This helps to explain why the share price of CLIQ and SONA is higher than therir listing price. Sona is in this stage now.

Found the Asset
After able to look for the Asset that they wanted to invest in, they will start to evaluate and do all sorts of research making sure that they are not investing in a lousy asset which gonna ruin the whole company as well as the reputation of SPAC. According to the management team, CLIQ is under this stage where they are looking at 5 oil and gas asset and evaluate whether which to go. 

Purchase of Asset & EGM
After those evaluations and quality assurance, the company had decided to invest in such asset. Due to the rules and regulations, the SPAC will have to conduct an EGM in order to get the approval from the shareholders before purchasing the asset. The SPAC will only able to purchase the asset after getting approval from their shareholders. 

Dig for BLACK GOLD
It's the time for seven little dwarf to do their job! We dig dig dig dig dig dig dig dig dig (reminding me about the song that the Seven little dwarf in the story of Snow White) Its the time we Dig our Oil Field and pray hard for the Black GOLD to be found soon! Hibiscus is currently at this stage and I think that they are about to hit the pot after listed for 2 years. Maybe it's a good chance to join the boat again? 

Hitting the POT!
This is the place when the company get their 1st drop of OIL!!! What do U think when they hit oil? Personally I think thats where the company will turn from a dream to a reality. Anyway, the share price of the company has big probability to move up to what it should be as it is able to produce profit for a long period until the oil field dry up.

Personally, I think Hibiscus will be the 1st SPAC to hit the pot as they are the 1st to get listed. By looking at the share price movement, I think there are something brewing in the company, have they got their 1st drop of oil? Let's see what will the management tell you on their AGM later. It's worth to take a look at their share price movement later as they might have good news to announce on their AGM. Let's get our finger cross. 

On the other hand, is CLIQ close to striking any asset acquisition deal? Ermm.. It's interesting, as the management had mentioned that they were evaluating which is the best to acquire. I do think that it will be great if they acquire an oil field which close to production as we will not get our neck long for their  prouction. Anyway, I think if you don't mind locking your money down for about 6 months, CLIQ will be a good choice as it closed at RM0.69 which is close to the 90% of the listed price which is RM0.75*0.9= RM0.675. It's quite a safe bet!

Hibiscus might be close to their 1st drop of oil, CLIQ might be close to their 1st acquisition. The issue mentioned above deem to be the factor that will drive the price to go up in near future. Which 1 do you think will come 1st? Who will be your choice? Good Luck and Huat ah!

 Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

A very good post from Le Investment

Came across this website and found this article which talk about my darling stock CLIQ. It really worth reading. I think RM1.00 for mother share is not a fantasy and it might go even higher! Huat ah!

 

周期分析： CLIQ能源(CLIQ:5234) 可以用木槿花石油为参考的目标吗？

CLIQ能源（CLIQ,5234,主板特別并购）是一间在油气领域的特別并购公司；该公司会寻找与收购能为投资者增值的资产。

SPAC是一间特別并购公司，在掛牌时应没有业务或者收入，其上市的目的就是筹措资金，以便去寻找与收购能为投资者增值的公司。

CLIQ能源就是一间特別并购公司，该公司拥有3年的时间去寻找符合条件的资产，如果届时没有找到，必须把90%在掛牌时所筹获的资金退还给投资者。

在美国，只有一半的特別并购公司完成真正的收购工作，而有关收购平均造成18.6%的负成长。

木槿花石油（HIBISCS,5199,主板工业产品组）是第一间特別并购公司，目前已收购了勘探和生产业务的公司，并正在进行其勘探活动。

CLIQ能源是在今年4月10日掛牌，是第二 间特別并购公司。SONA石油（SONA,5241）是第三间特別并购公司，它是在今年7月30日掛牌。

木槿花石油是在2011年7月25日掛牌，当天此股以0.54开出，最高掛0.58，当天最低0.52，当天收市掛0.53。

此股后来在2012年4月13日升至2.19的高价，上周三，即8月7日，此股掛1.45。

由于木槿花石油可以从掛牌当天最低的0.52，逐渐升至2.19，升幅1.67，上升天数263天，回酬率达321.15%，因此，大家认定CLIQ能源及SONA石油也会有同样的表现。

但，那只是一种迷思，不一定会成为事实，保守的人说，只要升至1令吉，他们也是有利可图了，因此，CLIQ能源及SONA石油的飙升是建立在人们相信这两只股会有飙升的可能；基础相信是虚的，他们的投资信心不是建立在公司的业务表现上，因为这两间公司目前仍没有业务。

周期分析

假定你手上持有1万 令吉现金，并且已经掌握了低买高卖的技术，你会在2013年5月3日以0.56买入1万7000股，并且在2013年5月20日以0.85沽出，凈赚4753.99，持票天数17天，回酬率49.94%，升幅0.29令吉。

第二次买入机会是在6月26日出现，假定你在当天以0.63买入1万7000股，并且在7月18日以0.785沽出，凈赚2458.45，持票天数22天，回酬率22.95%，升幅0.16。

从Metastock的图表看，此股的近期低点落在7月31日的0.645。

假如你在7月31日以0.645买入1万7000股，则可以在8月6日以0.715沽出，凈赚1020.34，持票天数6天，回酬率9.31%，升幅0.07。

上周三，即8月7日，此股掛0.705。

让我们看看中国的《弘历》投资软件有什么指示？主力资金是在7月31日陷入低点，当天收市掛0.65。

8月1日，主力资金进一步增多，散户则相对减少，当天收市掛0.68。

红圈买入讯号是在8月6日出 现，当天收市掛0.715。

如果根据主力资金的动向，你在看到主力资金於7月31日陷入低点后，即可以考虑在8月1日开市时以0.66买入，因为在7月31日时，此股陷入0.645的低点，收市回弹至0.65，已经出现两个正面的讯号。

此股有机会挑战0.785的第一道阻力，假如可以顺利通过，则会挑战0.85的第二道阻力，只有通过这两道阻力，才可以晋入一个无人可以挑战的空间。

此股投资要点：

1。 如果以木槿花石油为参考的目标，当然希望可以达到2.19的高价，但木槿花石油目前站稳在1.45，可以达到1.45的目标，投资者也会满意的。

2。 CLIQ能源至今接获38项计划书且从中挑选出5项符合要求的计划进入全面估值阶段，而区域涵盖印尼、巴布亚新几内亚及大马。

3。 收购受鉴定资产所需的成本至少5000万美元，而生产阶段的资产价 格则更加昂贵。只要可以完成收购，相信此股要升至1.45，是有机会的。1.45是以木槿花石油的市场价作为参考，是一个心理价格，是没有计算基础的。

4。 该公司必须遵从非常严格的估值过程，从受批准查阅目标资产资料，全面技术分析到资金调动，整个过程预计需要1年时间，因此在未来一两年内仍会非常波动，因此可以留意低买高卖的价格。

（WINSTON GOH 供 乐投资 专稿，转载请注明！)

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

 

SPAC Boom! (Part 2)

After coming back from holiday, it's time to get back into BIZ again. Its time to continue with my story telling session again! To continue with the SPAC Boom, 1 of my beloved lecture had give me a task by convince him that why should he invest in SPAC instead of those listed company which already has good track record and gives good dividend. 

To answer this question, I would have to touch about the concept of investing as well as the risk profile.

Investing in company with good track record and dividend
1st. Investing in a company that already has good track record is because we know about the past of the company and we could evaluate the company whether is it worth to invest or not. On the other hand, this is a very safe strategy to invest as we knew the pattern of the management and the capability to make profit in future. As long as the company is still doing well hence they will create wealth to the shareholders which is also the ultimate role of the board. As a result, those investors who invested in this company will be quite safe and get good dividend while enjoying the value growth in the company.

This is a traditional way of investing which I would say its quite safe and able to create wealth in long run, and it has proven that its 1 of the most succesful trading method we've seen. The best example will be Warren Buffet as well as Cold Eye (冷眼）.

Investing in SPAC
SPAC, a new avenue for talented person to set up a company without going to those venture capital which will squeeze them. SPAC is usually the initial point of the company where they have an idea and get money from investor to realise their idea. At this juncture, the company is selling you a "dream" by promising you that they will acquire good oil field that generates certain percentage of return which will be the bread and butter in future.

As a result of the company has no track record, the money that you invested in is very risky as you have no idea whether will the dreams come true or not. Anyhow, thanks to Bursa Malaysia that tries to protect us by having such rules as refunding 90% of the cash proceed from IPO to the shareholders which that mitigate our risk from losing everything if the company fails to acquire any assets.. On the other hand, the investor who invested their money into the SPAC should no longer call them as Investor but Venture capitalist. This is because we are now taking over the position of the venture capital or private equity and invest in the newly listed company.

Due to the high risk of investing in those company that is at its start up point, the return is usually good when it succeed. According to National Venture Capital Association of USA, It is estimated that 40 percent of venture backed companies fail; 40 percent return moderate amounts of capital; and only 20 percent or less produce high returns. It is the small percentage of high return deals that are most responsible for the venture capital industry consistently performing above the public markets. 

According to wikipedia
Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT and software. The typical venture capital investment occurs after the seed funding round as growth funding round (also referred to as Series A round) in the interest of generating a return through an eventual realization event, such as an IPO or trade sale of the company. Venture capital is a subset of private equity. Therefore, all venture capital is private equity, but not all private equity is venture capital.

After the capital protection from SC, the risk that we are taking are much more lesser and you can sit there and enjoy the show that run by the talented person. But wait, how do we make money? Capital appreciation seems to be the main factor that drive us invest in SPAC and this will happen when we believe the company is able to acquire a good oil field that can produce tonnes of crude oil for us, the company will become a little Petronas that produce oil in future. Are we building castle in the air? Indeed, and that's how we make quick buck right? Without any valuation that proves the price is overvalued and this make the price go up sky high and it will go even higher when they strike their first drop of Crude oil.

To those who invested in SPAC, we are all venture capitalist that afford for risk, we are oil digger that hunger for black gold which will bring us huge return. To those that who still refuse to be part of us, U can still get rich just that the time frame of safe investment will usually be longer than those who take more risk. High Risk, High Return ma...

In short, SPAC is for high risk profiler!

As an investors, we should have a blend of agressive investment as well as conservative investment. As a result, SPAC is 1 of the best option for your risky investment!

U may be nervous that will it be too late to invest now, but let me explain to U that why is it not too late by now and what is my strategy for SPAC. On the other hand, I will share with U about CLIQ in the next part.

Last but not least, let me grab this opportunity to greet my Muslim friends and readers 

Have a nice holiday and enjoy your big day! 

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions

 

The take away from the Taiwan Trip

8 days and 7 nights, a short trip I would call and it's tiring but it's fruitful. Why? I think I've learned quite a lot even its just a short trip.

Many would say, what can U learn by travelling? Actually travelling can let us know more about the culture of the other nations and see what they doing and learn from them! After all, I would like to share some of my experience and learning right here no matter its good or bad. 

The Kitty Land

This country loves Hello Kitty so much! They have everything about Hello Kitty! From the toys in McDonalds, facial tissue with Hello Kitty, Masks with Hello Kitty packaging and even Diapers with Hello Kitty packaging, Landyard and more! The best part is even EVA Air has Kitty Plane too!

Its so crazy until I can address Taiwan as Hello Kitty Land! 

Traffic

1st thing I notice about Taiwan is their traffic. The driver seat is at the left side of the vehicle and they are driving at right lane instead of left lane. 

2nd thing is their traffic light. The traffic here is a bit weird especially the traffic light for pedestrian. The traffic light is green for the car to make a turn but its green for the pedestrian to cross the street also. As a Malaysian, we will always wait for the car to stop even the signal light is green but in Taiwan, they will still cross the road and the car will stop for them just like things in UK. Even though its a bit scary, but seems like nothing bad had happen under my observation. LoL.. 

As you can see in the pic, the pedestrian have the right to go 1st and maybe that's the reason why we are puzzled when crossing the road. Don't really think that this happens in Malaysia.

Food

The food here wasn't that special, personally still prefer the food in Malaysia. 1 thing that I noticed here is that the food here wasn't too oily even it's a fried chicken. On the other hand, The KFC there was not as popular as what it is in Malaysia and the KFC there was good too! Though it looks pale but the taste of their Original Fried Chicken is awesome!

1 thing to add is that to all my fellow Malaysian, please be reminded that the fast food restaurant in Taiwan doesn't provide Chilli Sauce so pls bring ur own sambal belacan. LoL..

Other than that, I was thinking that I wanted to try the original Oyster Mee Sua in Taiwan but sadly, the original Ah Chung Mee Sua shop is not selling Oyster Mee Sua but actually is Pig Cologne Mee Sua. The taste of it was good but just that a little bit disappointed as I can't get oyster but pig cologne.
 Hot Star fried chicken wasn't really surprising as well, the taste of it is just about the same as the one in Malaysia. 

Surpirsingly, the McDonalds in Taiwan is not serving pork and the only fast food restaurant that serves pork is Subway. Subway serves pork bacon with egg for their breakfast. 

7-11 

This is a must go place when you go to Taiwan, the drinks there will make you drool! Look at the picture! They have lots of variety and very nice packaging as well as very nice taste.

If U were to ask me whether what do I miss the most in Taiwan, I think my answer will be the beverages is Taiwan!

They do have some fruit beers as well and the beer taste good too! 

Salary

I'm not sure about the other industry in Taiwan but the retailing industries there seems like paying quite well. As what I saw from Feng Jia, they are hiring a shopkeeper which the pay will range from NTD30,000-NTD50,000 which is about RM3,200 to RM5,300. I think those fresh grad in Malaysia wouldn't get such a good pay in Malaysia unless you join the some of the bank in Malaysia. I'm not sure whether how expensive is the rental there but I think RM3,200 and with the food price there is good enough to survive! 

The Best thing that I learn from Taiwan

The best thing that I learn from them is their retailing sector. 1st their attitude is good, they will try not to let you feel that U r being ignored by greeting you and asking you to try their product even you are not buying. I know that this is 1 of the tactic to lure you but isn't it a very good attitude?

On the other hand, they are quite good in value adding. How? I think they work really hard on their branding  and put lots of effort on the packaging. The bottles of their "milk tea" is so pretty until I feels like bringing it home to serve as collection. 

After getting to know about the good attitude, packaging and also value adding, how can I apply all these good value on my own as well as my job? Ermm.. Something important to think about. LoL..

P/s: to those who are interested whether where did I visited in Taiwan, you are welcome to click on the link below YZTiandi  or go to  http://www.yztiandi.blogspot.com/
Thanks!